Shell announced yesterday it was shortly to withdraw its final salary pension scheme for new entrants. It was the last FTSE company offering such a scheme to new entrants so now there are none as Diane Abbott might say.
This process started just a few days after the May 97 glorious revolution and coronation of our sun king Tony when the new chancellor Gordon and Ed etc were seeking a quick obscure source of funds for their crackpot schemes where the pigeons would not come home to roost for many years. This is a characteristic of our sordid politicians that I first met as a junior civil servant when at a meeting a minister declared that he was "not interested in solving the next government's problems". Reading between the lines the more problems that could be left to, or even created for, the next government the better was the message as Liam Byrne articulated when leaving office in 2010.
So Gord and Ed came up with taking tax breaks away from pension schemes to fund their payroll vote buying activities. These tax breaks were put there of course to encourage companies and employees to provide their own pensions! But who cared while the sun shone out of Tony's rear parts.
A few years previously a former Labour MP one Cap'n Bob Maxwell had perpetrated a gigantic fraud on the Mirror Group pension scheme which he treated as 'his' money. He could not have done this without the compliance of the pension scheme directors who were terrified of him. When this story broke the politicians reacted in the usual way with more rules and regulation culminating in the MFR or Minimum Funding Requirement legislation which whilst well intended had the unfortunate consequence of bankrupting many pension schemes. But who cares? The politicos had acted decisively to produce yet another pensions cock up.
That was when I first met Ros Altman. The effect of the MFR was to force pension schemes in trouble to invest in index linked government gilts whose price went up and yield went down as did the scheme members pensions! Worse if the scheme went belly up, usually because the company went bankrupt, existing pensioners were protected totally by putting the fund into indexed gilts. Who paid? Well those who were not yet drawing a pension ended up with virtually nothing. So if you retired the day before the bust you got what you had paid for and if you retired the day after you got zilch.
Another glorious page in the annals of liberal socialist cock ups. Your pension scheme might have survived one political 'solution' but two was one too many!
Panicked by the public response to this multiple cock our MPs rushed to feather their own nests in the usual way and with Cock Robin Cook in charge voted themselves a diamond encrusted gold plated pension which only needed 20 years arduous service fiddling their expenses to get in full. Poor Mr Cock did not live long enough to collect his succumbing to the Scottish disease at an early age. Too many deep fat fried Mars bars I opine.
The problem as with the banks later was not lack of regulation it was failure to enforce existing rules. The principal culprits are the so called independent non-executive directors who are all recruited from Three Wise Monkeys college in Slough. These like our useless House of Lords were all men and women of sound judgement and great experience of saying nothing, doing nothing and seeing nothing.
I do hope the unions get their act together and get workers representatives on the boards of companies and pension schemes and curb excessive executive pay and bonuses as well.
Meanwhile back in Euroland don't listen to the rhetoric, just watch the bond market. Italian 10 year yields are now at 7.21% as I write!