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The Actuary The magazine of the Institute & Faculty of Actuaries

Public service pensions

The Actuary in hand I am standing in my study. What have I come in to do? Ah, yes, I wanted to write regarding Robert Thomas’s excellent letter on public service pensions (July issue).

Icki Iqbal suggested a few issues ago that there should be a forum for disappointed actuaries. After momentary approval I realised it would become full of interminable correspondence about why things would be different if only people had listened, and, why nothing is really new...

A BOAC pilot asked me whether he should accept the terms of transfer from his old civil service-style pension of the nationalised airline to the new privatised BA pension scheme. Among other things I responded that, although the authorities seemed to be acquiring some understanding of how to avoid rampant inflation, they were not well motivated to do so being themselves fully insured against their own failure.

More recently for a briefly senior moment I thought the newly independent Bank of England would also have a new pension scheme with capped inflation increases. Come on Mr King et al, put your money where your mouth is!

It is indeed scandalous that proper values are not put on these huge and increasing liabilities, but who is willing to suggest the value of unlimited inflation protection?

What am I writing about? Oh yes… the economic consequences of overgenerous and unaccounted public service pensions – now where did I put the latest LSE mag?