CITY AND SUBURBAN
Bad news for old George now see who pays to put him right for pension
CHRISTOPHER FILDES
0 ne of the most cherished traditions of the British boardroom is now under threat. This is called Putting Old George Right For Pension. A small group of George's peers have carelessly let on how much this custom costs, and (even worse) who has to pay for it. George is a harmless member of the board, now heading for retirement, on a pension which will be a function of his length of service and his last 12 months' salary. To put him right, bump up his salary. After all, it's only for a year (his colleagues think) and one of these days we hope the board will do the same for us. Of course, if George is not so much harm- less as hopeless, we may have to push him out early, and the easiest way to do that is to let him retire on full pension. That's what we have a pension fund for, isn't it? Takes the strain off the profit and loss account. Now the boardroom barons on Sir Richard Greenbury's committee have con- trived to spoil the whole effect. The accounts, they say, do not show what it costs the company or what it is worth to George. At Coopers & Lybrand, the accountants have been doing the sums. At 55, George has 20 years' service, and is in a conventional scheme with five years to go to pension. The chaps have bumped him up from £100,000 a year to £125,000? Then the year's accounts should show that his pension benefits cost £158,000. They have given him a token £5,000 rise and pushed him out on full pension? Cost of pension benefits, £241,000. It will give the show away, say Coopers: 'Disclosure will uncover the many cross-subsidies that occur in final- salary schemes.' You bet.
On the sticky end
THOUSANDS of people further down the heap in George's company are paying to put him right. I doubt if any of them are directors. Nobody consulted them. Nobody told them. No one is now writing round to them to say that they might have been on the sticky end of a pension deal some seven years ago, so will they please fill this form in and stake their claim to compensation? (The Eligible Life has written me another letter on these lines; I dare say its computer is on automatic pilot.) No regulator wants to know if they were wrongly advised to stay in their company's scheme. I am not sure who is going to put them right for pension.
Never a drop to drink
I LIKE Yorkshire Water's forthright approach to customers. Irritated by their wish to use its product, it has written to them with helpful suggestions, such as: go away. Move your production somewhere else, says Yorkshire. Put the works on short time. Send the staff on holiday. Get them out of the showers. If all else fails, try dig- ging bore-holes. Customers are interrup- tions to the work of a producers' oligopoly. They actually want to use more water in hot weather, thus placing unreasonable demands upon the system. We must all hope that the people who run water compa- nies like Yorkshire are not as stupid as they look, because stupidity is relative, and when the old water boards were being priced for privatisation, they were able to outsmart the present government. Query: what is a water company? Answer: a water board with stock options. I have some helpful sug- gestions for the management of Yorkshire Water, such as: move the county of York- shire somewhere else. There is plenty of water in Northumberland, and in the desert land of Rajasthan, 573 reservoirs are full and 19 dams are overflowing. Alternatively, get one of those nice French water compa- nies to make a bid. They may have more money than sense, but they could at least organise a wash-up in a brewery.
Paris pinchpenny
A NASTY setback for my plan to be Her Britannic Majesty's ambassador and plenipotentiary to the Organisation for Economic Co-operation and Development. In this undemanding post, I would be expected to tone down the OECD's report on the British economy, and to cope with the Chancellor if he came to the annual meeting. (This year, he cut it.) The attrac- tion would have been my embassy, the Ville Said, an elegant town house in Paris's choicest arrondissement. Now I find that some diplomatic pinchpenny has put the Villa on the market, and the next ambas- sador can expect to be fobbed off with a mere apartment. Honestly, I don't think I shall bother. This is the sort of false econo- my that sets people asking whether we need two different ambassadors in Paris, and what, if anything, the OECD is supposed to be for. Last year, it decided that Mexico was a developed economy. It is finding that act hard to follow.
Many unhappy returns
TREES will die for this. The Inland Rev- enue is calling for 65,000 more tax returns and 65,000 cheques to yield the same amount of tax. The request has gone out to the specialist companies (the banks own most of them) which act as trustees. They will have to file separate returns, and write separate cheques, for every one of the trusts in their case. For many years a trustee com- pany has been allowed to file a single 'com- posite' return, with a single cheque to back it up. This practical arrangement, which suited everyone (including the taxmen) has become a casualty of the tax reforms which lead to self-assessment. So much pointless extra paperwork is no advertisement for these reforms. The cost will, of course, fall on the trusts' beneficiaries. They will suffer along with the trees.
Cover story
SWORDS into ploughshares and spy- ships into cruise liners: Swan Hellenic, the P&O company which ferries learned lec- turers around the ancient world, is to get a new ship, appropriately named Minerva. Well, not quite new — when she was called Ocean, she was (say P&O) the for- mer purpose-built Soviet spy vessel whose construction was halted by the end of the Cold War. Russian intelligence must have had quite a budget if it ran to a 12,000 tonner, built to order, but how was she to serve her masters' secret purposes? If a ship of that size sailed into Portsmouth Harbour, cameras popping, somebody would notice. Intelligence-gathering, so I suspect, was just a cover story for a yacht. The Queen might have a word with MI6 about that.
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