The preference of the Tories and their City backers is for "funded" pensions, where the pension pot is gambled on the stock exchange.
Hughes points out that in an unfunded pension money is deducted from working nurses' salaries to pay for the pensions of their retired former colleagues and in return they expect in turn to retire on money paid by the next generation of nurses.
The biggest lobby arguing about unfunded schemes are the bankers and investment advisers who were found so desperately wanting by the financial crisis. This lobby has the Tories' ears. David Davis called unfunded pension schemes a "scam," George Osborne said they put us on "the road to ruin" Tory economic spokesman Phil Hammond said they were ""storing up yet more problems for the future."
http://www.morningstaronline.co.uk/index.php/news/content/view/full/83444
A study published in June 2009 by the British-North America Committee (BNAC) on ‘the need for transparency in public sector pensions - a comparative study of occupational public sector pension schemes in US, UK & Canada’ is a classic example of the lobby in action.
Operating as a sort of Transatlantic Taxpayers Alliance the BNAC pulls no punches in declaring the purpose of its report ' the boards of private companies have considered the rising costs of existing defined benefit provision and decided that the benefits to their companies are often outweighed by the costs and forward liabilities involved. This paper tries to provide the taxpayers of each country with information similar to that available to private Boards, so the taxpayers (and their elected representatives) are better able to weigh up the costs and benefits, and to decide on the most appropriate public sector occupational pension provision for the future.'
The report goes on to calculate the UK "unfunded" pension liability, at $1.85 trillion, 85% of annual GDP and comments that "the UK stands out from the US and Canada as having a much larger net liability, brought about by a combination of large and generous public pension schemes covering a significant proportion of the workforce (25% - higher than in both US and Canada), and no funding in all but one of the schemes".
http://www.bnac.org/files/BNAC%20Public%20sector%20pensions%20BN49%20-%208%20June%2009.pdf
In his Morning Star article Solomon Hughes makes reference to former Bank of England economist Neil Record as a Tory donor and key influence in the lobby. It is instructive to note that the same Neil Record is the author of the BNAC study!
