KEN HOUSTON: BRITISH STEEL PENSION CHANGES – A PENSIONS STEAL?

KEN HOUSTON

It is probably the most blatant example of grand larceny carried out by a modern European democracy so far.

Three years ago the Cypriot government, desperate to keep the country in the Eurozone and acceding to demands by its Brussels paymasters, decided to recapitalise the Bank of Cyprus by the simple expedient of expropriating around 30 per cent of all savings above 100,000 euros held in personal accounts.

That some of the depositors may have been Russian oligarchs – people with whom one might not have natural sympathy – is beside the point; a very dangerous line in the sand between what is legal and illegal had been crossed.

One of the cheerleaders was the fragrant Christine Lagarde, chief of the IMF, who has pitched into the EU referendum campaign to lecture the British people on what a terrible mistake they would make should they vote to leave.

But whether voting to remain or leave, Britain will stay outside the Eurozone which presumably means that action similar to that in Cyprus couldn’t happen here.

Or could it?

A less direct (but still effective) method of parting ‘savers’ from their money (in this case those now drawing on pension funds to which they had previously contributed) seems to be underway with the DWP consultation on the future of the British Steel pension fund.

One option being touted is switching to the consumer price index (CPI) rather than the higher retail price index (RPI) as a means of calculating future pension payments to former employees of British Steel.

It could save £2.5 billion but at the cost of pensioners (and their widows) receiving lower annual increases or, in the case of some, having them frozen altogether.

The DWP jobsworths have spotted a loophole whereby pensions relating to years of service only after 1997 are legally required to be indexed whereas pensions for service before then are more restricted.

If the suggested change in the rules were applied, an 80-year-old on a pension of £100 a week could lose more than £10,000 should he/she survive for another decade, according to the insurer, Royal London.

This comes at a time when the government is trying to reduce the current British Steel pension deficit (estimated to be £700 million) in the hope of making the Tata-owned steel plants, currently up for sale, more amenable to buyers. So it could be a one-off.

There are, however, also concerns that such tactics might extend to other salary-related schemes, which of course would have a negative effect on the incomes of millions of pensioners’ across the country.

Even if this is legal then it must be close to the ‘cusp’ of legality. As for morality, is there much difference, in principle at least, between expropriating personal savings in a Cypriot bank and pulling the rug under pensioners by reducing the incomes which they were led to believe would be there’s for the remainder of their lives?

 

THE BIGGEST ELEPHANT IN THE SCOTTISH ROOM

Back in 2007 the government minister, Fergus Ewing, launched a report aimed at tackling sectarianism in the classroom, part of which contained a booklet showing how schools in various parts of the country had attempted to tackle the issue.

The booklet pointed to anti-sectarian initiatives in East Ayrshire, Glasgow and Renfrewshire as well as to Fox Covert in Edinburgh, where two primary schools, one non-denominational, the other Roman Catholic, have shared the same name and the same campus for more than 45 years.

So nearly a decade later it seems reasonable to assume further progress has been made; sadly, the situation is about to regress at one of the beacons featured in that optimistic booklet produced back in 2007.

At Fox Covert the hope must have been that the two primaries would, in time, merge, not only bringing the children even closer together but saving a small fortune in administration for Edinburgh City Council’s cash-strapped education department.

Instead, the RC school at Fox Covert is to be renamed – to make it sound “more Catholic”, with the name chosen likely to be that of one of the saints.

The head teacher, Ann Purcell, told The Herald that “families new to the associated parishes are often unaware that there is a local Catholic school” and that “two distinct names will increase the visibility of Fox Covert RC Primary School within the area.”

She said there had been occasions when youngsters’ achievements “were wrongly attributed”, adding: “Children are frequently disappointed by their achievements being attributed to Fox Covert Primary School. With a clear and distinctive name it becomes easier to build and sustain the unique identity of our school.”

Whatever saints name is chosen (and there are more than 10,000 of them) has still to be approved by Edinburgh’s education committee but what’s the betting it won’t be rubber-stamped?

That’s because politicians from every main political party still remain petrified at even acknowledging the presence of the biggest elephant in the Scottish room – state-funded religious apartheid at the heart of our school education system.

Twitter: @PropPRMan

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  Comments: 1

  1. Malcolm Oliver


    Ken is right that the proposal to move the British Steel scheme from RPI indexation to CPI is the thin end of a dangerous wedge – although of course if the proposal does not go through (or if the company still folds nonetheless) then the Pensions Protection Fund will have to pick up the bill – which it will meet by increasing its levy on all solvent pension funds, and thus their members – ie most of us!

    But it is not true that indexation is only legally required for service since 1997. Ken is referring here to a specific statute that introduced this as a minimum requirement for ALL pension schemes – and if I remember correctly this originally referred to RPI and has been changed more recently to CPI. But all pension schemes are also legal contracts between the Trustee and the scheme member, and most good schemes already had agreements on indexation before the 1997 statute came in. For example, the scheme of which I am a member promises indexation against RPI up to a maximum of 10%.

    Such clauses are just as much a “legal requirement” as those imposed by statute, and will remain so unless parliament passes a draconian law that REQUIRES, rather than just allows, trustees to renege on the scheme promises. That would make an interesting case for the Supreme Court, in the light of Hoffmann LJ’s judgment in the Equitable Life case, but the danger is that the proposed changes with the British Steel scheme are the first step down that slippery slope.

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