I realise that most people reading this will not understand the headline, final salary pension schemes are a wonderful thing. They link your pension directly to your salary at retirement and go up each year after that. It’s even better if you left the company years ago, because the legislation says the final salary that your pension will be paid on is probably considerably more than if you had stayed with the company. From a personal point of view they are fantastic. But consider it from the company’s point of view. It is really galling to pay someone that hasn’t worked for you for a long time proportionately more than employees who have stayed loyal.
Also that you get fined for continuing in business and having a final salary pension scheme, to pay for all those that failed. One area where failure pays more than success, but that is probably just a state of mind within the Government – why break the mould they know so well.
The negative impact a final salary scheme can have on the morale of a business’s management is massive. It consumes proportionately more time than other activities that create growth and wealth. It is a problem that’s very difficult to solve, it drains the business of cash and lasts a lifetime. No wonder so many choose to give up and close, it is the only solution to the curse of the final salary scheme.
Quantitative easing may have helped the country but it placed a debt burden on pension schemes that project forward using government gilts, which are not worth a lot at the moment. This can cripple balance sheets and credit rating and increase the penal fine called the PPF levy.
Does anyone give a damn? Only the few having to live with it. Government think it fair a fine should be levied to protect those that may fail to survive.
They have little respect for the fact many public sector workers are on final salary schemes and that the burden of the pensions shortfall will fall on tax payers. The Government has the same problem with these schemes but they can’t go bust or fine themselves, nor will they sort it out. I have found plenty of English people who would vote for Scottish independence but I’m yet to find a turkey that voted for Christmas.