Palm-tree pensions
THE European Court dispenses palm-tree justice. It sits like a pasha under a palm tree, unconcerned with precedent, indiffe- rent to practice, and happy to make up the law as it goes along. A large sticky object has now fallen out of the tree and onto the head of the pension funds. In a case called Barber v. Guardian Royal Exchange, the court has airily asserted that pensions are the same as pay. That is news to our own courts, though they have been inching in that direction. In the Barber case, the court went on to say that since men and women were entitled to equal pay for equal work, they must have equal pension rights, starting with their retirement ages. Tut, says Brian MacMahon at the National Association of Pension Funds — 'Com- panies provide occupational pension schemes voluntarily, and if they become too expensive companies may stop provid- ing them.' No, Mr MacMahon, not after Barber. Pension payments are no more voluntary than pay packets. They are part of the consideration in a contract of em- ployment. What happens to that payment once it gets into the fund is another story. It loses its identity in a whirlpool of cross-subsidisation — leavers subsidising stayers, secretaries subsidising chairmen. Barber gives it another swirl. Missing from all this is the idea of ownership. Millions of people do now directly own their indi- vidual pension funds, and after Barber and its doctrine of equal pay it will be harder for companies to contribute less to these funds than they do to their own. The Financial Times's leader-writer, who may have been talking to Mr MacMahon, feared that companies might abandon schemes related to final salaries in favour of money purchase schemes 'which offer more uncertain benefits to pensioners'. Uncertain? Let me break it to him — he cannot be certain where he will be working when he wants to retire, or when that will be, or what his salary will be, or what his pension will be, or whether the two will be in any way related. If he were in a money-purchase scheme, though, he would own his share of it and what he got out of it would depend on what had been put into it. Even the European Court could scarcely redistribute that away.
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