USS 'black hole' scare story is a product of false accounting

Follow-up to Misleading Newsnight story on Universities Pension Scheme from Dennis Leech's blog

This scare story has been repeated in the Times Higher Education supplement and also in an article in the Financial Times who are printing my reply.

John Ralfe is well known in the pensions industry for his sensational views and, as Richard Bryan says in his comment, has a reputation for not having being entirely successful in managing the Boots pension scheme by doing what he wants to foist on the USS. His ideas have an evangelical quality. His fundamentalistt mark-to-market views represent one pole of thought in pensions economics, one which views pensions in purely financial terms, in a neoliberal or Thatcherite political economy. There is a need for more balance in this important debate.

IT DOES NOT MATTER what discount rate is used to calculate the liabilities figure - the pensions that have to be paid remain the same. That is because pensions are DEFINED by the rules of the scheme not by interest rates.

What members have a right to know is whether the USS will have enough income to pay the pensions. All the evidence we have is that it has. Members will get a better view of that if the accounts are provided on a continuing basis rather than as a mark-to-market snapshot.

Dennis Leech : 03 Nov 2013 15:11 |  Tags: Pensions |  Comments (0) |  Report a problem