Comment | Con Keating
How not to fix under-funded DB schemes
Con Keating
con2.keating@
brightonrockgroup.co.uk
Con Keating is head of research at BrightonRock Group
This month Con Keating looks at the recommendations for helping DB schemes to close their deficits.
Two recent reports have crowded out the original subject of this article, which was to be concerned with the tensions within the UN’s Sustainable Development Goals and the related topics of cli- mate change, responsible investment and stew- ardship. Perhaps that will allow time for the sci- entific causes and consequences of the increasingly rapid movement of the magnetic North Pole to become clear. The first report of concern – The soaring cost of government pensions – was published by the Inter- generational Foundation and concerned unfunded public sector defined benefit (DB) schemes. The report claims that: “Those receiv-
16 | portfolio institutional | May–June 2019 | issue 84
ing pensions of over £50,000 are costing the nation more than £1.2bn a year, and the number receiving them has increased by 239% in just seven years.” It also states: “The NHS is the big- gest source of these generous pensions: of those receiving more than £100,000 a year in the three big schemes (teachers, NHS and civil service) 76% are in the NHS scheme.”
The tone is one of outrage. “The burden on younger generations is made even greater by the profligacy of public sector pensions.” The report notes that the latest government accounts show an unfunded public sector pen- sion liability of £1.7trn.
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