You might have thought that £47bn would be enough to keep 300,000 increasingly elderly BT pensioners in the style which the company had promised. At £150,000 each, it’s much more than most workers could hope to accumulate in their pension pots. You would, of course, be wrong. BT’s actuaries have decided that it’s £7bn short of what’s needed to meet the company’s promises.

Despite the money BT has shovelled into the scheme, the shortfall is almost twice what it was the last time the actuaries looked, three years ago. They’ve agreed a 16-year plan for payment, but it’s just as well BT is in rather better shape than it was in 2001, when it sold off its mobile phone business. Indeed, it’s doing well enough to splash out £12.5bn (though not much in cash) to buy the ridiculously-named EE, an even bigger mobile phone business than the one it sold.

That £7bn deficit figure – eight years of dividends at the current rate – is entirely the work of the actuaries. It’s almost impossible for outsiders to follow their maths, so the pension fund trusteees must accept it, remembering that they could be personally liable to 300,000 pensioners if they don’t.

The collapse in bond prices means that the “present value” of the promises is much greater than it was when the actuaries last looked, even though the pensioners are older. Given the way things are going, as bond yields turn negative, the deficit might get even bigger. This is the madhouse of actuarial mathematics.

Imagine, instead, if each beneficiary had his own pension pot. The latest reforms would allow him to choose what to do with his (average) £150,000 of savings, with that extra £7 billion over the next 16 years shared between the survivors. They would be freed of the demands of the actuaries, while BT’s shareholders would be freed of the possibility of a still more costly calculation next time around. BT’s management could concentrate on convincing the customers that bigger really does mean better. Well, we can all dream.

Can pay, won’t pay

Do you want to pay for your bank account? Neither do 62 per cent of those surveyed by PwC. An even greater proportion spotted that there’s no such thing as a free lunch, but until the bill arrives, are happy to keep eating.

They don’t expect the bill to come to them, and for the majority, they’re right. The cost of free banking is borne by those who can’t stay in the black, or those who buy things from their bank, like payment protection insurance. The argument from the banks currently runs: if we charged you for current accounts in credit, then we wouldn’t have to sting you for everything else we’re trying to sell.

This is ingenious, even if it lacks credibility, given how PPI has exposed their real-life behaviour. If it’s so compelling, then we’d happily pay for current accounts in return for cheap loans, attractive deposit rates or useful insurance. Those banks which have tried it have not been killed in the rush.

PwC’s Steve Davies suggests a different approach. He argues that free banking stifles innovation and ensures that the so-called challenger banks will never make an impact. He suggests that the banking regulator might intervene. Best of luck with that. “Regulator forces consumers to pay” is a career-threatening headline. Given the choice, 62 per cent would rather not. What were the other 38 per cent thinking?

How green was my Spar

The saga of the Brent Spar is one of Greenpeace’s more disgraceful episodes. It boarded the oil storage tank as it was being towed out for dumping in the ocean, providing irresistible tv news footage and forcing Shell to bring it back to be broken up onshore. Last week the company embarked on dismantling the Brent Delta platform, which the subsequent rules oblige it to deal with the same wasteful way.

Thus was a golden opportunity for conservation lost to a political stunt. Controlled dumping of surplus unstallations would have created a marine sanctuary, allowing Atlantic fish to escape the monster nets of the trawlers.Now there are hardly enough fish left to bother.

This is my FT column from Saturday

 

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