Could it happen again?
March 5, 2012 Leave a comment
Laurel
On 30 March 2001 the BBC carried an article discussing the Department of Trade report into the Robert Maxwell affair. This involved Maxwell taking over £400m from his company’s pension fund, leaving 32,000 pensioners fearing for their future financial security. The BBC asked ‘Could it happen again?’
11 years later on 4 March 2012 the Sunday Times Business section leads with the headline ‘Osborne grabs £28bn windfall.’ This is the plan by the Conservative government to take over the Post Office pension fund. According to the Sunday Times, the pension fund has a net deficit under current accounting rules (as applied in the private sector) of £4.6bn, but for government accounting purposes (which it attributes to ‘quirks’) the liabilities of some £32.6bn will not appear as liabilities on the government’s books. The assets, however, of some £28bn, will be regarded as a ‘surplus’ and will be liquidated ‘creating a new pool of cash for the chancellor to play with.’
Apparently some conservatives would like the money to be used to invest in infrastructure projects, such as roads power stations and railways. This is despite the fact that pension funds typically do not invest in such schemes until they are completed, because of the high risks involved.




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