There is a point during the 1969 film “Butch Cassidy and the Sundance Kid” in which Butch (played by the late and much missed Paul Newman) and Sundance (played by Robert Redford) have, along with their gang, forced a train to stop with the object of robbing it. The train has a safe in it which has been built with added locks to protect it against the unwanted attentions of outlaws (in particular outlaws such as Butch and Sundance). Calling for additional dynamite and lots of it, Butch packs this around the safe doors, stands back and turns to Sundance with the remark “well; that ought-ta do it”. The resulting explosion destroys not only the safe but the railway carriage it was sitting in (oddly, the actual cash seems to survive – thousands of banknotes are blown skyward and then drift gently earthwards – some of them to be scooped up by outlaws about to be chased and, in some cases, killed by the forces of law and order).
Last week, Pensions News (PN) was talking to two individuals who had just participated in a meeting of a pension scheme in which PN was present (in his capacity as an adviser). Talk turned to the US presidential election. To PN’s surprise, one of the individuals stated that he hoped that the presidential candidate named Mr Donald Trump would win the election. The other individual nodded in agreement leaving PN isolated in his (albeit slightly reluctant) support for the presidential candidate called something other than Mr Donald Trump. PN asked why Mr Trump had the benefit of his companions’ support and was told by the first individual that he (being Mr Trump - not PN) would “shake up” politics in the USA if elected. The other individual remarked that he thought US citizens were about to do the same as many in this country had done in “sticking two fingers up at the politicians” by voting “no” when asked if they wanted the UK to remain in the European Union (EU). The two individuals were clear that Mr Trump’s “inevitable” victory (note that PN is quoting third parties now, not expressing an opinion) was comparable to this country’s vote to leave the EU and that both were to be celebrated. PN thinks that a victory by Mr Trump would indeed be a victory comparable to that which was won by the “leave” campaign on 24 June (2016) however PN will not go so far as to suggest that either is a cause for celebration.
PN has been searching (of late) for arguments which would prove his own opinion about non-EU participation wrong. Depressed by the fall in the value of Sterling and the remorselessly downbeat economic forecasts (which appear to PN to be founded on evidence as opposed to pessimism), PN noted that certain entities and individuals are likely to benefit from the UK’s decision to leave the EU. According to the Financial Times (FT), there are a number of individuals living in this country who are paid in a currency which is not Sterling. Such individuals include bankers employed by EU and US banks and members of the European Parliament (MEPs). With a peculiar irony, this last category includes Mr Nigel Farage MEP and other members of his political party who were apparently instrumental in the success of the “leave” campaign. Being paid in US Dollars or Euros in this country brings a windfall when the value of Sterling decreases. According to the FT, individuals such as the bankers and MEPs referred to above are likely to be paid the equivalent of a 15% pay rise purely on the strength of Sterling’s fall in value against the US Dollar and the Euro. A more positive spin (if that is, indeed what we are looking for here) is that where pension schemes have investments which are (for instance) valued in dollars, transposing that value into Sterling will show a return for the scheme.
Applying that principle to a current set of circumstances, it was with interest that PN noted the Sunday Times’ article (see edition of 23-10-16) which pointed to the decrease in the value of the deficit in the British Steel Pension Scheme (BSPS). You, the reader of PN, will recall that PN has referred to the deficit in the BSPS in previous editions of PN. At the time, PN reported that the deficit in that scheme was valued at £700m and that politicians were exercising their intellectual equipment quite vigorously to see what, if anything, could be done to control / manage/ reduce that deficit. The Sunday Times reported that the deficit is down from the estimated (in May 2016) £700m to about £50m. The change, according to the chairman of the board of trustees of the BSPS, is directly attributable to the fall in the value of Sterling and the increase in the value of shareholdings of companies (some of them UK companies) who benefit as a result of the fall in Sterling’s value and whose shares the BSPS holds.
PN was more interested still to read about the decision by managers of the Post Office to go on strike next week over pensions; in particular the pension scheme which provides salary-related benefits and which appears not to have a deficit at all. The managers have decided to go on strike further to a decision by the Post Office to close the pension scheme to all future benefit accrual with effect from 31 March 2017. According to the managers’ trade union (vis. Unite), 736 Post Office managers will join members of the Communication Workers’ Union in taking strike action for 24 hours from 03:00h (that’s 3am to those of you who don’t do 24 hour clocks – or at the point where the big hand is on the 12 and the little hand is on the 3 and it’s still dark for those who don’t like 12 or 24 hour clocks) next Monday (vis. 31 October). According to Unite, more strikes could occur during “the run-up to Christmas” (a period which seems to PN to start during August these days). It seems to PN that the Post Office has had a lot to deal with over the past years and that the dispute over its pension scheme is just the latest situation in a long line situations which have needed to be managed. Things seemed to go badly wrong when the Post Office, in a previous incarnation, paid an eye-watering amount of money to change its name to “Consignia”; a word which seemed to have been chosen because of its lack of significance in almost any language (although it is similar to the Spanish word for “left luggage office” – come on Spanish scholars, show your neighbour that you know what that word is). Thinking about this name change with the benefit of hindsight, it does seem to PN that the Post Office may as well have been managed at the time of the original name change by persons so unsuitable that they couldn’t have seemed any more unsuitable had they turned up to the office wearing flying helmets and flippers. How many more mistakes were made during that era? (asks PN of nobody in particular). Realising, all too late, that the name change to “Consignia” was misconceived (which is putting it mildly in PN’s view), Consignia paid another eye-watering amount to re-re-structure itself into what it is now. The name is different however the problems seem to remain as the proposal to close the pension scheme seems to confirm. Mr Brian Scott, Unite’s understated officer within the Post Office, was ready to confirm, in his own quiet way, PN’s suspicions when he suggested that he was not pleased with the Post Office and neither were his members. He said “our members were angered at the announcement….[to] close the scheme…….senior management has been pig-headed in refusing to enter into meaningful and constructive talks……on these abysmal pension changes”. As stated, given that it has been reported that the Post Office pension scheme has no deficit, Mr Scott’s frustration is easier to understand. That point having been made, most finance officers of PN’s acquaintance would probably also decide to close a pension scheme and wind it up within minutes of being told that that scheme had enough money to cover the value of its liabilities. “Why wait until the scheme is dragging the company under?” said one such FD to PN some time ago.
This brings us back to our opening theme in a sort of a way. PN had a host of quotations to choose from to illustrate his point and almost (but not quite) quoted Michael Caine’s infamous reaction in “The Italian Job” when a colleague of his overdid it on the explosives’ front. Remarking “you’re only supposed to blow the bloody doors off!”, Mr Caine might also have observed that his colleague really ought to have watched and learned from the mistake Butch and Sundance had made in their film of the same year. PN is quite ready to believe that there are American citizens and that there were UK citizens who are thinking and who thought to themselves “well; that ought-ta do it” before voting in favour of Mr Trump and to leave the EU (respectively). There are some English citizens (PN has met them) who voted “leave” and who are currently observing the consequences of their “victory” in much the same way that Butch and Sundance watched charred banknotes floating back to earth before mounting their horses and riding off into the sunset (pursued by a trained team of outlaw hunters). To those who are looking at their pension schemes and wondering how quickly they can get rid of them, perhaps now is the time to wonder whether “getting rid” should be revised to “getting into” which is surely the whole point about pension schemes. Butch and Sundance would have approved.