I read with great delight that reform of the "Firm's Pension Scheme" system seems to be on the cards in the UK. This is long overdue, however, I feel intuitively that it will not go anywhere near far enough.
For years Grumpy is convinced that there have been huge abuses of the system which seems to have little precluding the parent company using the pension fund as their own private piggy bank.
It is accepted that current legislation precludes the possibility of a pension fund owning shares in the parent company, but it is the freebooting way in which the parent company approach the pension fund and other matters, in particular in their alacrity or lack thereof in making their particular contribution.
When one is employed by one of these (usually) large companies, a clause in your employment contract with The Company agrees that you will pay a percentage of your monthly salary into the pension fund (usually something like 5%). The clause actually states (and is therefore legally contractual) that The Company will make a like contribution.
When these "company" pension schemes are set up they are obligated to be legally established independently of The Company. However they invariably seem to have a clause in their "operating rules" that allows them, under certain circumstances, to allow The Company a "pension holiday", whereby The Company makes no contributions to the pension fund in that year.
Bearing in mind that The Company already has a contractual obligation with its employees to make a contribution, it escapes Grumpy to see how the pension fund can be set up to allow somebody else (the pension fund managers) to (legally?) arbitrarily abrogate that responsibility.
In Grumpy's view, The Company is plainly in breach of its contract with its employees. Doing so is an abuse of privilege as the employee is usually more concerned about his security of employment now, than what is perceived as a small cut in the contributions being made to his pension fund. In short The Company is at best giving all its employees a salary cut, at worst, one could view that The Company is openly stealing from its own employees. Both views present a most iniquitous vision
Clearly such actions by The Company can only lead to the pension fund being in deficit, the size of that deficit being dependent on the frequency with which The Company gives itself a pension holiday. It is interesting that many companies who go into liquidation admit they also have a pension fund deficit!
It is therefore high time that "company pension schemes" be totally and utterly disconnected from The Company concerned. Furthermore contributions to employee pension funds should be considered on a similar financial precedent with such payments as VAT and income tax, the avoidance of which at the appropriate time represents a criminal offence, punishable by fines and penalties (which in this case could peraps be levied and passed to the pension fund)
Clearly as part of this government review, the overall order of priority for the settlement of debts needs to be reviewed and matters like staff salaries and pension fund contributions should come very closely behind VAT and income tax.
As an example of some of the ills perpetrated regarding these matters Grumpy is reminded of a large firm (Carillion) that recently went insolvent with debts in telephone number figures. What astounded Grumpy were reports in the press suggesting that three directors who were already being paid multi-million pound salaries would continue to receive these salaries, some for the next six months, others seemingly eighteen months to two years. What was iniquitous, was it was also reported that when they left, they would be paid large pension pots. All of this was on the basis of their Contract of Employment. Grumpy feels it is iniquitous, immoral and legally questionable that these people, who had so skilfully steered the large company well and truly onto the rocks, should be rewarded in such an obscene fashion when the employee at the "coalface" who had given his heart and soul to The Company got two days pay and an empty pension fund. Grumpy believes in these circumstances significant financial recompense should be sought from the incompetent directors concerned.
Finally, Grumpy is absolutely astounded that one hears very little from the Trades Unions, who claim to be representing employees rights, when these pension holidays are declared by large companies. This is particularly galling if one takes the sum of money The Company is "stealing" from its employees, and computes how much that sum may be worth to the employees pension pot in 15 or 30 years time.
To read about more abuses of your employment rights, see also .....bigbro3.....and ..... bigbro3-1 .... You may also find .....bigbro1.....and .....bigbro2... of wider interest in this matter.