Home » Posts tagged 'Pensions'
Tag Archives: Pensions
Some people thought it was all over after last week’s entry. If you have been paying attention you will know that there was always more to my life than work.
Shortly after I began work at Brough I received a letter from a tracing agency asking was I the same Frank Parker whose father, Frank Alfred George Parker, was an airman killed in action in 1943. If so, I should get in touch in order to learn something of benefit. At first I thought this was a hoax, perhaps orchestrated by my son or my brother-in-law, both of whom were fond of practical jokes. Nevertheless I responded and was informed that a brother of my father’s had recently died intestate. The agency had been engaged, by the solicitor handling his estate, to locate next of kin.
In the years immediately following the war, and my father’s death, my mother had fallen out of favour with his family for reasons I never fully understood. It could be that the arrival of my sister more than 2 years after his death made my mother persona non-grata with my paternal grand-parents. There was, also, my mother’s belief, which she shared with me in a letter when I was in the process of moving from Hereford to Coventry in 1968, that my father was conducting an affair with another woman at the time of his death.
Whatever the reason, I can recall only two contacts with any of my father’s kin. The first was when my mother, my sister and I undertook a trip to London shortly after her mother’s death in 1948. We visited several of her prewar friends and relatives and I have a vague recollection of an elderly couple in a dark and smokey kitchen who I assume were my grand parents. The other memory is of a couple of about the same age as my mother who came to stay for a few days with us at around the same time.
This consisted of a brother of my father’s (not the one to whom the letter referred) and his wife/girl friend who was evidently suffering from some sickness of the mind, perhaps alcohol induced. I can remember a lot of shouting and the use of bad language, after which the couple left.
Whilst I had occasionally wondered about my relatives on my father’s side, the discovery that I might be entitled to a small legacy came as a surprise. The legacy arrived in two installments, one from his liquid savings, the second from the sale of his house.
There was a third amount, lodged in the account of a woman who had, it was said, looked after him for a number of years. What, I was asked, did I want to do about this? Should her right to keep this sum be contested? This question was asked of all the qualified inheritors.
I have no idea what response the others made to this question, but mine was to the effect that before receiving the letter from the tracing agency I had no idea the man even existed. I had no intention of depriving someone who not only knew him, but cared for him, of a sum which, so far as I could tell, he had intended her to have.
I used part of the money to purchase an annuity in Freda’s name since she would, if I were to die before her, receive only half of my pension entitlements. When, on my 60th birthday, I began receiving my Courtaulds pension, I began making regular payments into that annuity. The other anticipated advantage of providing this future income in Freda’s name was that her total income would likely be below the UK personal tax threshold, whereas mine would not.
Meanwhile, through my membership of the CVS management committee I became involved in a project to convert a disused school in the town of Goole into a facility for community groups. When I first heard about the plan I was scornful, believing it would be impossible for the small community to raise the amount of money required. The National Lottery had not been in existence for very long at this stage and ran several different funds tailored to specific objectives. One of these was the celebration of the Millennium. Our project qualified for that and one other objective.
The locally raised element of the total cost could be represented by voluntary labour as well as cash fund-raising. A small team of volunteers, including myself, therefore set to work carrying out whatever demolition work was required – taking down false ceilings, removing shelving and timber panelling, digging up tiled floors and removing tiles from walls.
The project was finished well before the millennium and provided office space for several community groups, a community hall, a community games room and a couple of seminar rooms, all clustered around a courtyard, which gave the building its new name – The Courtyard. Both the CVS and the Talking Newspaper, which I was still leading, had their base in the building. Having been a member of the project steering committee during the construction phase, I, like the others, now became a member of the board of trustees managing the facility.
I had taken up cycling, partly as exercise and partly as a means of exploring a wider area of East Yorkshire than is possible on foot. In 2002 the government granted an extra holiday in recognition of Queen Elizabeth’s Golden Jubilee. I undertook to spend that day cycling 100 miles to raise funds for the talking newspaper. I was accompanied by a friend of one of our committee members, a life-long member of a local cycling club who regularly took part in cycling holidays in continental Europe.
We began at 8:30 am in the market square in Howden. Following the Eastern section of the Trans Pennine Trail, we cycled to the coastal resort of Hornsea, arriving around 1pm and stopping for a picnic lunch before setting off again to arrive back in Howden around 6pm.
My boss, the Chief Engineer, was heavily invested in the waste burning project. My council workload was becoming a problem for him. He came to discuss the situation with me, saying he was finding that when he needed to discuss work with me I was not around. Could we come to an arrangement whereby my council business would be confined to specific days of the week? I should point out that, up to this point, the company had been extremely generous in allowing me time off with pay for these duties, subject to my returning the council attendance allowance to them.
A subsequent meeting with the Site Director resulted in the suggestion that a voluntary redundancy package could be put together should I wish to leave. For me the suggestion was welcome, provided the terms were right. It would enable me to embark on my preferred career as a writer and/or politician. When the terms were put to me, they were indeed generous. A tax free lump sum, roughly equivalent to two years salary. In addition, my qualifying service for my future pension would be increased from 18 to 20 years and the pension would be paid from age 60, not 65.
Coincidentally, the company’s pension had been a subject I had addressed in an article for the Senior Staff Association magazine a few years before. A number of the members were exercised about what seemed like inadequate communication between the executive and the membership. I and one of the Chemists from the R&D department in Coventry had, independently of each other, proposed that a members’ newsletter or magazine was needed. “Why don’t the pair of you get together and produce it?” was the challenging response, and we did.
There was a general feeling that Courtaulds’ staff pension scheme did not measure up to those offered by the civil service and other “blue chip” companies. I investigated and concluded that our scheme was – I think my words were – “disappointingly average,” backing that conclusion with data gleaned from various sources. You could call it my first piece of investigative journalism! The basic principle of all such schemes, based on rules established by the tax authorities because the contributions were tax exempt, was that the pension earned by the combined contributions of employer and employee, extending over 40 years, should not exceed 2/3 of your final salary.
More than 30 years later, now that I have been in receipt of a pension from the scheme for 17 years, I have to say I am grateful to have been a member whilst I was an employee.
To her credit Freda supported my decision to leave my safe, secure job. Ian was now well settled in his position as a student nurse, living in Lincoln and making new friends. It would not be easy living on the meagre attendance allowance and Freda’s salary from the Spastics’ Society, but the lump sum redundancy payment would yield some income if wisely invested and I hoped to be able to generate some additional income from writing.
I left Courtaulds shortly before my 45th birthday in November 1986. One of the first things I bought on the strength of my severance package was a Word Processor. Since the early 1980s I had had access to an Apple 2 desk top computer at work and, more recently, this had been replaced by a Hewlett Packard PC which was networked with new HP mainframe computers.
The Amstrad Word Processor came in two versions – the basic 256 kb machine with one built-in floppy disc drive and the larger 512 kb machine with two disc slots. I opted for the 512. The main advantage of this being that you did not have to keep swapping discs. To explain that properly, it is necessary to realise that neither 256 nor 512 kb of on-board memory allowed for any software to be permanently installed. You used one disc to load the software, then saved the files you created to a separate floppy disc. This was infinitely easier with two discs than with one.
I had become quite accomplished at using Lotus 123 spreadsheets for work so my colleagues purchased, as their leaving gift for me, a spreadsheet programme that would run on the Amstrad. Because of the limited on-board memory you had to create your spreadsheet from scratch, defining how many columns and lines you would need. A long way from the seemingly infinite number of columns, lines and sheets that can be utilised on present day spreadsheets!
About five years ago I wrote a review of a book called “The Candy Store Generation” in which its author had argued that everything that was wrong with the USA at the time was the fault of the Baby Boomer generation. A British politician had started the fashion for blaming the elderly in a much more widely read book (The Pinch, by David Willetts, pub. Atlantic, 2011). Now a new book gaining a lot of publicity in the USA is making similar arguments. Meanwhile in the UK one of the issues already being talked about in the General Election campaign is the so-called ‘triple lock’ on pensions. For the benefit of those not familiar with this particular device, what it means is that the basic state pension is guaranteed to increase in line with the higher of wages, prices or 2.5%.
There is a term that has been coined to describe the supposed phenomenon whereby the old take a greater share of a nation’s resources than do the young: inter-generational theft.
You can read my review of David Todd’s book here, and his review of the new American book here. For the purpose of this article I intend to restrict my comments to the situation of UK pensioners – after all, I am one – and to a refutation of the underlying notion of inter-generational theft.
A segment about the triple lock on BBC news the other evening explained that, whereas in the past senior citizen incomes were substantially below average earnings, they are now slightly ahead. (You can see a graph of this alongside this BBC article). Some have used this fact to argue that the ‘double lock’ – linking pensions to cost of living or wages – is adequate and that 2.5% is an unnecessary additional burden on the exchequer. On the face of it, and bearing in mind the other ‘perks’ that senior citizens receive, from winter heating allowance to free TV licenses and subsidised public transport, it is a compelling argument.
At a time when the crisis in social care in the UK means that some old people are occupying hospital beds and resources when they could be cared for at home, why not eliminate the 2.5% guarantee and use the money to provide more home care, or care home places?
The use of averages for this comparison is, as is often the case, misleading. The figure for ‘average pensioner incomes’ includes many for whom the state pension is only a small part of their total income because they have private pensions and investments. For them the 2.5% guarantee is virtually meaningless. However, there remains a significant degree of pensioner poverty in the UK. As one of those fortunate to have a private pension, I can well see that anyone who has to rely solely upon the state pension must find it extremely difficult to make ends meet. For such people the little extra that the 2.5% represents is important.
At the same time I can understand how the young, faced with student loans, low wages and the high cost of housing, might resent the fact that some older people seem to lead a feather-bedded existence.
My contention, however, remains the same as when I reviewed Todd’s book: it is as wrong to pit one generation against another as it is to blame a particular ethnic group or nationality for all that is wrong with the world. (See my article about the dangers of scapegoating here). Every generation has its share of people who prefer scamming the system to working; every generation has a few who use their power and influence to screw over everyone else. And, yes, there are more people with power and influence among the old than among the young. But whilst taking from the rich to give to the poor is a good idea, taking from every old person to give to the young is not.
And a plethora of words beginning with P that have been constantly in the background of my life. In particular the public vs private debate, and the prejudices and preconceptions that surround the provision of services and the profit motive. As we shall see, it also impinges on pensions, and involves the use – and, sometimes, misuse – of the partnership concept.
Education and health services are publicly provided in the UK, although those who can afford it have always been able to avail themselves of private health care and education; the latter, oddly enough, provided by so called ‘public schools’.
In recent years the distinction between public and private provision in these sectors has been blurred by public/private partnerships, particularly something termed the private finance initiative (PFI). This enables private companies to profit by charging hospitals, for example, and Local Education Authorities, to use facilities provided using high cost loans from private banks.
Defence, law enforcement, and transport infrastructure, are publicly provided, although PFI projects have also been utilised in these sectors – for example the provision of court buildings. Private companies now operate the train services that use the national rail network. Some UK prisons are operated by private sector companies.
The debate was at its height during the period of my childhood and youth. The post WW II Labour government nationalised key industries: road and rail transport, energy production and distribution (coal, gas and electricity), post and telecommunications, iron and steel production. Conservative governments de-nationalised some of these in the 1950s, only for Labour to re-nationalise them in the ’60s. When road vehicle and aircraft production got into difficulties in the ’70s they were nationalised. Every one of these, except post and railways, were finally de-nationalised in the 1980s. The current situation with railways I have already described above. Postal services have been under threat of at least partial privatisation for a number of years.
The central questions for me have always been:
- Does the proposed ownership model make it more or less likely the organisation will be better managed?
- Does the need for private companies to make a profit add to the cost of what they do or provide an incentive for them to do it better?
I have concluded that there is no right answer to either question. So much depends on the motivation of those employed in the organisation. Where health and education are concerned, the passion and commitment of the professionals that provide the service is what ensures the quality of the service they provide is the best it can be. I don’t think it is possible to say whether the pursuit of profit, or of government policy priorities, are more or less likely to impair their ability.
Reward is what motivates people in all organisations. In those situations where ethical considerations do not take centre stage it is the principle motivator. In such situations some part of the monetary reward is often related to performance and may include a profit share. It usually includes some provision for income beyond retirement – a pension.
In the UK – and I imagine elsewhere – publicly funded pensions provide only a basic standard of living. In order for a senior citizen to maintain a lifestyle similar to that enjoyed prior to his or her retirement, he or she needs to make separate, private, provision. In practice most schemes are supported by contributions from both employee and employer. It is only possible for the funds accruing in such schemes to hold their value in relation to inflation by investing to produce additional income via interest and dividend receipts. Dividends are the method by which private sector profits are distributed. It follows that pensions are dependent upon the continuing profitability of private companies.
When I first began to think about what I would produce for the letter P in the atoz challenge the word ‘pert’ came to mind. Not, I hasten to add, the word often used to describe the shape of a young woman’s chest but PERT, an acronym that stands for Programme Evaluation and Review Technique. I thought I could describe how it evolved over my 40+ years in Engineering to become EVM (Earned Value Management). That would have been a boring post. But I mention it here because the first time it was properly applied to a defence contract in the UK it was at the insistence of Australian politicians who believed they had been screwed over too many times by defence contractors who delivered very late and massively over budget. It worked. I know, because I was part of it.
Why is it relevant here? Because it demonstrates that private sector organisations can work in partnership with politicians to deliver projects that meet expectations, including a fair profit margin for the contractor. All it needs is for both partners to gain a thorough understanding of those expectations and to agree on what is required in order to meet them.
Please feel free to voice your opinion. Is profit evil? Is public provision too close to communism to be acceptable?