Yet More People Scoffing from the Trough

[Ursa major]

SOME of Britain’s top civil servants and quango chiefs are receiving lucrative perks as annual “housing allowances” worth many thousands of pounds from the taxpayer.

Whitehall did its best last week to hide the extent of the allowances, which in some cases are worth more than £40,000 - twice the controversial subsidies given to MPs.

But it emerged that senior officials at the NHS, the Qualifications and Curriculum Authority, the Legal Services Commission and Transport for London have quietly amassed the housing perks. There was anger last night that some had not relocated their homes to qualify.

Civil servants get £40,000 home perk - Times Online

I find the use of this type of allowance by some MPs (the one's who live near, but not in, London) bad enough, but when an MP's constituency is a long way from Westminster, there is at least some basis for a subsidy of some kind. However, in one or two of the cases uncovered in the Sunday Times article, the behaviour looks to be edging towards sharp practice if not downright fraud; for example:

David Nicholson, the head of the NHS, claims an annual £37,600 allowance for working away from home - yet he was already working and living in London when he took the job three years ago, so did not have to relocate. Nicholson was head of NHS London, and had a flat in the centre of the city, when he was moved to his highly paid London-based post in charge of the National Health Service in 2006.

[Tillane]

Stephen O’Brien, the Tories’ shadow health minister, said: “Why is it that NHS bosses think it is acceptable to award themselves generous perks like second-home allowances and inflation-busting pay rises while hard-working nurses are being forced to take what is effectively a pay cut of 1.9%?”

A quite frankly astonishing bit of hypocrisy from O'Brien there. Not that I'm overly surprised...

[Ursa major]

Nicholson [...] has told parliament that he intends to “squeeze the pay bill in the NHS”.

Can I have a finder's fee for pointing out a £37,600 sum that could be saved immediately and with no impact on the service provided. (Or would a day's management consultant fee be more than the finder's fee? It's best to sort out these things up front, you know.)

[Dave]

Aren't Salaries in London sufficiently higher to accommodate the increased cost of living and housing costs anyway? Surely anyone applying for a post in London is aware of the Salary and cost of living first. If someone has to sell their 5 bedroom house in order to afford a 2 bedroom apartment that is tough, but at least it is the same for everyone. They can always decide not to take the job. These people don't live in the real world, they already have final salary pensions that no one in the private sector can get any more, and they also want subsidised housing too!

[mosaix]

Is anyone really surprised?

[Ursa major]

And here is something else that will surprise no-one:

Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, is already drawing a pension of £650,000 a year, despite only being 50.

The BBC has learned that the pot that generates his pension is worth £16m.

Sir Fred's strategy and decision to buy ABN Amro is widely seen as making the bank more vulnerable to the credit crunch and having to be bailed out.

RBS, which is 70% owned by taxpayers, is expected to announce the UK's biggest corporate loss on Thursday.

BBC NEWS | Business | Huge pension for former RBS boss

"UK Financial Investments, which manages the government's shareholding, has been working with the new chairman and the new board to see what scope there may be for clawing back some of this payment," Treasury Minister Stephen Timms said, after the BBC informed the Treasury of the pension arrangements.

Good luck to them in clawing back this money; they'll need it. (And I don't know what is worse: the BBC having to tell the Treasury about this or the Treasury wanting to let us think that it had to be told, presumably to cover its lack of action up until now.)

[Dave]

I'd like to know where his pension is invested - I want to put mine there. Last year, one of my pension schemes lost twice more than I paid into it. And don't even talk to me about endowments.

I still don't understand how anyone in a Bank can get a bonus. Companies pay bonuses out of their profits. If you help make a big profit then you share in that profit. If, however, the company makes a loss, then it's very tough, but at least you still have a job to go to. Other companies making losses have gone bankrupt, made redundancies, or have asked staff to take pay cuts. Banks live in some fantasy world where they make a loss, get money taken from the taxes of people who still have a job, keep their own jobs, and then get bonuses to boot.

[Ursa major]

I'm assuming that the £16 million is a notional amount, representing some sort of actuarial calculation of the cost of his annual pension**, so I'd guess that he hasn't got any of that money invested anywhere: it'll be part of the RBS pension fund.

While the RBS pension fund will have investments, they don't have to be safer than anywhere you and I could put our money. The portfolio will be mixed: as RBS has a large active workforce, there'll be quite a lot invested in shares, as well as bonds, gilts and - a recent trend - a few percent in one or more hedge funds. That's beside the point though: given that we're talking about a company pension scheme, the company - RBS - is required to make good - over time - shortfalls in the fund.

As we are guaranteeing RBS, ultimately this greedy, foolish and incompetent man has direct access to the money in my pocket and yours (while it lasts).

I hope this thought cheers you up for the rest of the day.




** - It is only about £1650 a day, and that's before tax.

[Ursa major]

Sorry about the double post, but the man's pension is about £1780 per day before tax.

[Dave]

I'm not sure I understand this now. I've been out in the car listening to the radio and this is a topic of conversation. It was generally agreed on there that Alistair Darling cannot really take this money back because it was money that Fred Goodwin was fairly paid, and placed into investments which have been lucky enough to do well, and anything Darling says different is just his attempt to suck up to the public. However, you seem to be saying that this is instead a Final Salary Pension scheme, the kind that no one (apart from MPs who voted to keep their own) can get any more because no company can afford them. If so, that tends to put a completely different light on things. If so, he must have the highest Final Salary Pension in the entire world. And it will be taxpayers who will be funding it. This is crazy people living in crazy land.

[Ursa major]

It is very hard to say, Dave.

The phrase I keep hearing and seeing is "pension pot". To quote the Daily Telegraph (on a different topic - from 2002):

The term "pension pot" means savings built up in pension plans - or in a money-purchase (but not final-salary) company pension.

Where the pot is held is unknown (to me). £16 million is more than enough to buy a non-inflation-linked pension of £650000 per annum for a single man of 50, but I doubt that this profile matches Sir Fred Goodwin's profile or his wants.



To answer your original question, the safest place for it is in a pension fund guaranteed by a government-owned company that will not be allowed to fail, which is why I assumed that was where the money was: the RBS pension fund.



By the way, the Grauniad and FT are stating that the pension is worth £693000 per annum (just short of £1900 a day).

[Ursa major]

I found this in Peston's blog (BBC NEWS | The Reporters | Robert Peston):

And did all board directors know about and approve the arrangement?

It would be odd if they didn't know, because Sir Fred has his own "funded, non-registered" pension arrangement outside of the main pension scheme. And the bank would probably have had to transfer an estimated £8m or so into that personal scheme to lift it to the required amount to finance the £650,000 payments (the total value of Sir Fred's pot, as I disclosed yesterday, is £16m).

(My bolding.)

So it's "outside of the main pension scheme", Dave, but one could read a number of things into that phrase. Wherever it is, and whoever is administering it and backing it up, Fred's hanging onto it.

[Dave]

Yes, I've heard and read nothing else but Goodwin's pension on the TV and Radio and newspapers, so now we are all experts on it.

What is coming to light is that these banks have Remuneration Committees who decide on who gets how much. One would ask why did they award such a high pension to someone who single-handedly destroyed their bank, but then when you look closely at who sits on the committees, it is the same directors and non-executive directors on the same committees at every bank, and they are the same people who stand to gain when their own time comes around. A very similar committee just awarded a big pay out to Sir James Crosby, the director of HBOS blamed for its demise.

I'm still finding this all like something from Alice in Wonderland.

[Boneman]

Heard a wonderful take on it on Terry Wogan this morning - radio was stuck, honest...... A suggestion was made that we grant Scotland the independence they want from the rest of the Union, and give them The Royal Bank Of Scotland as a goodbye present......

[Tillane]

Best quote I heard was from - of all people - John Prescott, who basically said the government should take Goodwin's pension off him "and let him try to sue." Oh, if only it were that simple, John...