People seeking safety at any price?



I was annoyed to listen to one of the Bank of England’s Chief Economists Andy Haldane tell the BBC’s Robert Peston that people were seeking safety at any price.

Passing the buck on to the “cautious consumer” may play out well in Threadneedle Street, but it should raise the hairs on the back of the neck of any of the 200,000 people who started new businesses in the UK last year (of whom I was one).

The average Joe in this country has suffered wages deflation in real terms over the past six years, many have found their wages falling in actual terms and for that they have little to blame themselves and plenty to blame the Banks for- not least the Bank of England who were supposed to be regulating the behaviour of the banking community in the years leading up to 2008.

But put that aside, let me look at the behaviour of the Bank of England today.

In the 2013 Financial Statements of the Bank of England Staff Pension Scheme we can discover the Bank funding the pension scheme at the rate of 53% of the member’s salary.

We can also find that 100% of the fund was invested in Bonds, mostly Government Bonds. This means that the Trustees had adopted a “safety at any price” philosophy! Any price being some 5,300% more employer contribution than most people being enrolled into pensions in 2013 were getting!

Finally we find that members were asked to contribute 0% of salary to give them this quite literally “gilt-edged” plan.

The rate this year has dropped to “only 43%” of pay – whew – what a let off for the tax-payer! The lucky people getting a 1% employer contribution into their workplace pensions will be relieved to hear that they are only getting 1/43rd of their Banking colleagues (albeit they are being asked to pick up the Banker’s bills in their PAYE.


It seems very wrong to hear a senior banker pontificate about people’s caution when his employer (and maybe his trustees) are showing such a bad example. The ridiculous funding rate is iniquitous, but equally appalling is the opportunity cost of such a “safety at any price” investment strategy.

Where is the investment in the infrastructure of this country, where the investment in the great growth engine, our smaller businesses?

Certainly nowhere to be seen from the trustees of the Bank of England Pension.

One law for the City, one law for the rest?

One pension for Government employees, one pension for the rest?

A voice for the Economist, no voice for those who pay his wages and pension.

If any people are exhibiting “safety at any price” it is the Bank of England. The authority of Economists like Andy Haldane is undermined by the practice of his bank and of its pension scheme.

Before blaming the public for being over cautious, the Bank of England should remember that it is the public who is meeting the price of the Bank’s own pension scheme.

Don’t throw rocks at the people in glass houses, especially when they are the people who will be asked to replace the glass!



About henry tapper

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