Uk bosses, should you sell-out your pensioners?


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If you work in pensions you get used to talking about pensioners as an undesireable commodity, loaded with risk and consequently a toxic element on a company’s balance-sheet.

If you happen to be a pensioner or likely to be a pensioner of your company, you may feel this a tad harsh – after all, the profits of your company are to some extent down to your efforts and as your CEO constantly reminds you “my company’s greatest assets are its people!”.

Another dictum of current pension speak is that we are in an “end-game” , the result of which will be the buy-out of these toxic pensioners by an insurance company.

There is considerable evidence that people like to be paid their pension by their company. The phrase “better the devil you know” was not coined for nothing. People who have built up pots of money in personal pensions chose to have their pensions paid by their personal pensions even when they can get a better deal on the open market and though this may be down to inertia (laziness) there are also elements of loyalty mingled in.

If you have worked your life for a Unilever or a BP or your local opticians or car-dealers and you find that your pension has been bought out by Met Life or Pensions Insurance Corporation, you may feel a little miffed.

The link between you and your employer has been lost. 

There was a dy when employers were so associated with their local community that they were their local community – Port Sunlight without Unilever, Belfast without Harland and Wolfe, Bournville without Cadbury. It happens but at a cost.

By contrast, companies which run pensioner payrolls and maintain the risk of their pensioners, have an intangible asset which is rarely quoted and I suspect undervalued. BT, with over 100,000 pensioners, has a long-established pensioners association whihc does great credit to the company. Many pension managers of mature defined benefit schemes will talk with affection of pensioner lunches and the goodwill that is retained for the employer that arises. 

I very much doubt that UK bosses are much fussed by these arguments. Their job is to please their shareholders and mtters as intangible as pensioner goodwill is unlikely to be writ large on the question sheets of the analysts they report to.

As so often, the value of these associations will likely be recognised when it has been lost and we will find ourselves looking back at pensioner associations with nostalgia tinged with regret that we didn’t do more to keep them going.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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