Royal Mail pensions fund changes short-sighted and dangerous
19 March 2012
SUGGESTED
Monetary Policy
Philip Booth responds to Government plans for 100-year bonds
14 March 2012
Press Release
Government and Institutions
The IEA responds to the Government's plan to nationalise Royal Mail pension assets
Commenting on the idea of nationalising the assets of the Royal Mail pension fund, Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
“The government’s decision to nationalise the assets of the Royal Mail pension fund whilst taking on all future liabilities is short-sighted and dangerous. The assets will be used immediately to reduce the government’s debt whilst the liabilities – made up of future pensions to workers – will no longer be funded and will have to be met by future generations of taxpayers. The liabilities will be hidden from the government’s accounts.
“According to the government’s own figures, the liabilities are £10bn greater than the assets which stand at £28bn. However, if valued properly, the liabilities would probably be well over £20bn more than the assets. Government accounts will show a reduction in the government’s national debt of £28bn whereas, in reality, the national debt will be increasing by over £20bn.
“Although the government claims that it will not be spending the £28bn raised from taking over the assets because it will be used to reduce its borrowing, future governments are less likely to feel so constrained. The government would not allow a private sector company to get away with such shoddy – indeed, underhand – accounting practices.”
Notes to editors
To arrange an interview with Philip Booth, Editorial Director at the IEA, please contact Stephanie Lis, Director of Communications: 020 7799 8909, slis@iea.org.uk
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
“The government’s decision to nationalise the assets of the Royal Mail pension fund whilst taking on all future liabilities is short-sighted and dangerous. The assets will be used immediately to reduce the government’s debt whilst the liabilities – made up of future pensions to workers – will no longer be funded and will have to be met by future generations of taxpayers. The liabilities will be hidden from the government’s accounts.
“According to the government’s own figures, the liabilities are £10bn greater than the assets which stand at £28bn. However, if valued properly, the liabilities would probably be well over £20bn more than the assets. Government accounts will show a reduction in the government’s national debt of £28bn whereas, in reality, the national debt will be increasing by over £20bn.
“Although the government claims that it will not be spending the £28bn raised from taking over the assets because it will be used to reduce its borrowing, future governments are less likely to feel so constrained. The government would not allow a private sector company to get away with such shoddy – indeed, underhand – accounting practices.”
Notes to editors
To arrange an interview with Philip Booth, Editorial Director at the IEA, please contact Stephanie Lis, Director of Communications: 020 7799 8909, slis@iea.org.uk
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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