We hear a lot about financial well-being , which is something we are taught by financial educators in the workplace.

“We’ll help you look after yourself”, stuff.

But for decades, companies took on the task of providing staff with genuine help, by offering help to staff in hardship. The pension scheme was often used to do this and while stopping short of philanthropy, the view was that what was in the pension scheme was there for its members.

Two things have changed since those days

1. The benefits of a pension scheme changed from being a promise to a guarantee
2. The pension became a corporate liability rather than an asset.

While these changes were impacting the sponsor, the trustees and the regulators, the members of the pension scheme carried on working and when they stopped working, they carried on getting paid, this time through the pension scheme.

Meanwhile, a secondary market in pensions grew up, one which allowed these pensions to be taken away and consumed privately. Those who took their pensions away , signed to say they no longer wanted to be a part of the company’s pension scheme.

A common view of company pensions last century#

But most workers did not take away their pensions, they stayed loyal to the scheme and expected the scheme to stay loyal to them.

Nobody told them that the pension scheme had become a millstone around the corporate neck or that they had become liabilities, rather than beneficiaries. They assumed that the pension scheme would deliver to them the security in retirement it had delivered to those who came before them. They realised that in bad times, they would get no more than the bare promise but that in good times there would be “shared outcomes”.

It is difficult to explain this kind of contract to those who were not working in the 1970s and 1980s and 1990s. But it is easy for us to listen to them today. Here are some of their stories, together with an eloquent explanation from John Furniss-Wright.

A pension scheme loses its way when it loses its members. By and large, BP members stayed loyal to their scheme and to their company.

It is not so much the scheme but its sponsor that has lost the way. Loyal members are left asking why the company they trusted, will not engage with them.