Hearing that there was no-one on the waiting list for attractive sheltered housing in Bournville, which used to have one many pages long, focussed the attention on the collapse of private pensions.

The explanation was that people no longer get a sufficient pension income to enable them to pay the rent of this accommodation, so they are burdened with the cares and maintenance of family houses which could otherwise be fully used.

There have been plenty of warnings:

robin blackburnIn 2002 Professor Robin Blackburn argued that pension funds had been depleted by wasteful promotion and used as gambling chips by ruthless and overpaid top executives.

In Banking on Death he analysed the challenge facing public schemes and the malfunctioning of private retirement provision.

In the world of “grey capitalism,” employees’ savings have been sequestrated from them and pressed into the service of corporate aggrandisement. Fund managers’ notorious short-termism and herd instinct, and their failure to curb the greed and irresponsibility of the corporate elite, lead to obscene inequalities and a blighted social landscape. As we live longer, employers are closing their pension schemes and many claim that public treasuries will not be able to cope with the retirement of the babyboomer generation.

Blackburn proposed a public regime of asset-based welfare, ensuring secondary pensions for all and fostering a more responsible, egalitarian and humane pattern of economic development.

In 2006, the Parliamentary Ombudsman, Ann Abraham, reported on her investigation into the actions of government bodies in relation to the security of final salary occupational pensions. MPs had referred complaints made against the Department for Work and Pensions, the Treasury, the former Occupational Pensions Regulatory Authority and the National Insurance Contributions Office. The investigation uncovered evidence of real suffering, distress and uncertainty about the future among pension scheme members and their families, who had relied on government information when making choices about their future pension provision.

The insecurity of occupational pensions  

The Pensions Act of 2008 introduced measures aimed at encouraging greater private saving in a National Employment Savings Trust [NEST]. NEST contributions – 4%t of salary for staff, 3% from employers and 1% from the taxpayer – would be invested in the stock market as in the Australian model.

However, as  Pensions Minister, Steve Webb, then said that the Government would offer no guarantee as to the value of the funds: “I can’t think of a government anywhere in the world that guarantees against stock-market fluctuations”.

secret wealth garden coverCllr John Clancy’s new book The Secret Wealth Garden: Re-wiring Local Government Pension Funds back into Regional Economies, reviewed by Professor David Bailey, sets out the case for reforming Britain’s local government pension funds, now being considered by Labour’s Shadow Work and Pensions Secretary Rachel Reeves.

He explains that Clancy’s work shows UK local government pension schemes have paid £2.7 billion in fees to investment managers since 2007. Those investments go into the global economy in search of returns, but very little is ever invested back in the local economies where it started, in housing, infrastructure or local businesses.

A review by the Guardian’s Larry Elliott focusses on the ‘de-risking’ of funds by amending the Local Government Investment Regulations to require a shift away from equities (particularly overseas equities) together with a minimum holding in regional and local investment bonds. This, he says, could provide up to £20bn a year for investment in infrastructure and house building. Finally, the local authority funds should amalgamate themselves into one big fund. which would have real financial clout. Elliott ends:

“It could do wonders for localism, regeneration and rebalancing to boot”.

Meanwhile, in the Queen’s speech, the government proposed Dutch-style “collective pensions”, which are shared with thousands of other members and regarded “by many” as a better investment because they are less vulnerable to stock market variations.

Minister Steve Webb shelved plans to give employers more powers to change the terms of salary-linked schemes, which guarantee employees a certain amount on retirement, after companies indicated that they would not take them up. The FT reports that, according to government insiders, companies made clear that the one power they wanted was to be able to make retroactive changes to existing schemes.

Could we see “a more responsible, egalitarian and humane pattern of economic development” or will those with no prospect of index-linked final salary schemes always be obliged to depend on the global casino?