Amber Rudd Really Is Dreadfully Ignorant About Pensions And Sir Philip Green


That politicians disagree with us or each other about what should be done, what defines the Good Life, is fair enough, that’s rather what they’re for after all. To sift through such definitions, compare them with reality and thus bring us as close as possible to that defined Good Life. But to be in an argument with reality is not a good look. It means they’re either stupid or ignorant – the reader can make up their own mind here. For Amber Rudd has woefully misunderstood what happened with Sir Philip Green and the BHS pensions:

Executives who “wilfully or recklessly” mismanage pension funds face up to seven years in prison, under government plans to avoid future “Philip Green-style pension scandals”. Amber Rudd, the Work and Pensions Secretary, today reveals that a new criminal offence will outlaw company directors “playing fast and loose” with workers’ retirement savings. The worst offenders will face jail terms of seven years, with courts also given the powers to levy unlimited fines. Writing in The Sunday Telegraph, Ms Rudd, a former City executive, states: “For too long, the reckless few playing fast and loose with people’s futures have got away scot-free … And then you pick up a paper and read that the fat-cat…

The manner in which the British Establishment has portrayed Sir Philip as nothing but some Jewboy schmutter hendler getting ideas above his station is bad enough. But to then completely misunderstand what actually happened with the BHS pensions is worse.

For a start, he did actually pay up. That pension fund was made good. Thus there is no argument that his behaviour requires more laws in order to make people cough up. Why do we need more and stricter laws to make people do what has already been done?

Rather more importantly though he didn’t even do anything wrong with those pensions. He didn’t take money which should rightfully have paid them, didn’t do a Maxwell etc. There was that dividend paid out, sure there was. In 2004 or 2005. At a time that the BHS pension fund was topped up, fully funded. It was in very mild deficit a couple of years later but that’s just swings and roundabouts of valuations.

Then in 2008/9 it went into substantial deficit. Why? Quantitative Easing, that’s why. Sure, the value of assets went up but as these things work lower interest rates mean the value of pensions liabilities go up more than assets do*. Then it really went kablooie a few years later again when it became obvious that low interest rates would last more than just a couple of years.

That vast hole in the BHS pensions account was caused by the Bank of England rather than Philip Green. He’d not been taking money out, d’ye see? It was the mismatch in valuations, not an extraction of righteously pensions cash, which caused the problem.

So, we’ve Amber Rudd proposing new law on the back of Sir Philip’s actions. New law which entirely ignores what actually happened, that reality. So, Amber Rudd, ignorant or just stupid?

Or even malevolent? Perhaps this is just what politics is, using the scapegoat of the Jewboy schmutter hendler to pass just and righteous changes? If so the worse for politics as a way of interacting with reality then, eh?

*Bond holdings are rarely longer than 30 year durations, more likely 15 to 20 on average. Pensions liabilities can and will extend to 40 and 50 years. The upward movement of the bond price only reflects the lower interest rate for that 15 years, that higher of the liability for the 50.