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Is that why the BBC Trust diverted £1 billion of licence fee payments into the BBC Pension Scheme last year?
And given the scheme's still increasing liabilities - up another billion pounds - despite the first tranche of subsidy, have we to look forward to another huge (secretive) transfer from licence fee payments to head that way shortly with all the reduced programming that results?

It doesn't add up...

To pretend that the highly distorted market for index linked gilts provides any kind of basis for assessing realistic discount rates is an absurdity. It merely reflects the fact that government investments tend to destroy value, and are busy doing so via inflation, QE, and compulsory investment in gilts for annuities.

Local Tory

We can all agree that, by any historical measure, there is a dislocation in the fixed-rate interest market most likely caused by QE.

Many would argue further that the pendulum has swung a bit too far in valuations and that the exaggerated dislocation will pull back a bit as the economy recovers.

So in the LGPS it makes no sense whatsoever to crystallise long-term 40 year liabilities on the basis of a short-term aggravating factors. To do so risks dramatically /overestimating/ liabilities with consequent knock-on effects to Council Tax Payers, who pay into the scheme.

Remember that, unlike the NHS, Police, Soldiers & Fire schemes, the 89 Local Government [LGPS] schemes are 'funded' schemes where benefits are paid from a £150bn investment pot just like private schemes.

So the proposed use of synthetic indicators that do not rely entirely on the [temporary] dislocation in the bond market for the 2013 LGPS revaluation and the use of factors take a longer-term view is not only sensible but avoids the risk of over-taxation by Councils at a time when the economy needs a reduction in public sector taxation and expenditure.

Otherwise we risk making the same mistake that Brown made in 1997/8.... but in reverse. - He crystallised a compounded reduction in long-term income. Let's not crystallise a compound increase in liabilities on a basis that was used in the Good Times.

William MacDougall

Private sector pensions were partly destroyed by this silly idea that the discount rate should be Gilts, rather than corporate bonds, or better long term equity returns; they were a AA promise at best, so why use a AAA bond rate, let alone the Gilt rate? To use Index Linked Gilts is even sillier given the narrowness of that market. And you are mistaken, the government pension is a public promise, not a private company commitment, so projected tax increases are not so unreasonable at all.

anthony scholefield

About the only writer on ConHome who is a must read. I will be printing this off and studying it..
However a first sweep does not seem to reveal that the EU discount rate is 'nominal 5% and reAL3%'. and that is the driver and the rate that applies to British state pensions. Neil would cut his throat if he gave us the figures for the old age pension on the sam basis.


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Private sector pension part is this stupid idea, the discount rate should be phnom penh bonds, rather than corporate bonds, or better long-term equity returns; AA, so why are they promise in it is best to use AAA bond interest rates, not to mention the plating rate?


You know with all the junk, spam, and cons out there I suspected this was one as well. And since it isn't done in the way of a question I was ready to push the abuse button. But it appears to be a righteous story and I hope others will go to the site and see for themselves.


At least it's the first step in getting to grips with public sector pensions. I agree with the premise of your article that the reforms don't go far enough just yet, however, the realisation is looming large that the subsidised public sector pension will have to come to an end sooner or later.

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Sorry, I don”t need people knowing where I am 24/7. I find it odd that people would feel there is v alue add to their friends knowing where they are all the time. Oh well, to each his own.I agree with the 3 bucks being too much. I remember when Cydia apps were almost all free. It almost feels like they are charging for everything on there anymore. It”s slightly depressing.haha. “Well said?” Uh, no. He”s full of crap. The two websites look WAY too similar, and shows a complete lack of design originality on Google”s part. Did either of you even look at them? Technically it is not a free service because you still need to pay for a very expensive iphone 4 when the other iphones cannot get the service for free even though they are capable of it. ^the lag is thanks to the introduction of ios4.x. I couldn”t stand it on my 3GS and had to upgrade to ip4, yet ip4 still lags, the memory management is so horrible. Sj messed up big time…


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Public sector pension reforms - ConservativeHome | Thinkers' Corner

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