Tuesday, 26 October 2010

More Stuff that worries me

I really don't like the look of this at all.

Any thoughts anyone?

Lola

My latest blogpost: More Stuff that worries meTweet this! Posted by Lola at 16:37

10 comments:

Rational Anarchist said...

Out of interest, why don't you like it?

It doesn't seem unprecedented (M&S do something similar iirc)...

26 October 2010 at 17:18
Anonymous said...

No, I don't like it either. Unlike a private company who own their assets and can do as they wish with them these are public assets, bought and paid for by the local taxpayers.

26 October 2010 at 18:06
Lola said...

RA - see comment by Anon.

26 October 2010 at 18:54
Mark Wadsworth said...

L, I second what Anon says. Sure, these public sector people have awarded themselves handsome pensions, but let's keep the cash flows on the books.

i.e. the council keeps the car parks, accounts for the income and shows the pension payments as an expense (or contribution to the pension fund).

If they start helping themselves to taxpayer-owned assets left right and centre, they will just disappear forever and they'll be able to delude people who look at their accounts into thinking that the pensions are nowhere near as generous as they really are.

26 October 2010 at 19:12
Robin Smith said...

Me neither. What has the most value:

1) A perpetual rental stream kept
2) A captialised rental stream sold

Most sales of public assets(If this is what is happening here) go abroad nowadays, to states where enterprise still produces wealth

i.e. China

26 October 2010 at 19:13
Lola said...

Thank you everyone - that's broadly what I think. I can feel a 'letter to the editor' coming on.

26 October 2010 at 20:19
James Higham said...

Can't get in. Have to register.

26 October 2010 at 20:29
Mark Wadsworth said...

JH, article as follows:

Three local authorities are on the verge of transferring ownership of council property, including car parks, to indebted pension funds.

The Royal Bank of Scotland’s pensions solutions group is in formal planning stages with the bodies, all English, and has received expressions of interest from a further five.

The unprecedented deals, the first of which is expected to be completed by spring, could in some cases reduce funding deficits by 5%.

Council buildings will be transferred into special purpose vehicles which give the council some measure of control and which then pass rental income to the pension funds.

RBS pensions solutions director Guy Whitby-Smith said: “It is a lot easier selling these provisions to pension funds who understand the local issues, than it is to a third party property fund. Also there is going to be some upside for the council if the assets increase in value.”

The deals are likely to be struck on buildings that have been sub-let or from car parks which receive receipts from the public.

While the use of such contingent assets has become commonplace among private sector companies, these would be the first of their kind in the public sector.

The development follows two weeks before local government pension schemes (LGPS) receive the results of their three-year actuarial valuations.

According to estimates from John Wright (pictured), head of public sector for Hymans Robertson, these are expected to show deficits have increased from an average 85% funding to just 80%.

The deficits would have been worse if not for the public sector pay freeze and the move to link the indexing of pensions to consumer price inflation – Wright calculated this had shaved 6-7% off LGPS deficits.

Clifford Simms, a partner at law firm Hammonds, said LGPS funds would not face the same 5% self-investment limit as private sector funds.

26 October 2010 at 20:42
Robin Smith said...

JH

Same happened to me. It worked 2nd try!!!

26 October 2010 at 21:56
Rational Anarchist said...

I was looking at the following part:

"RBS pensions solutions director Guy Whitby-Smith said: “It is a lot easier selling these provisions to pension funds who understand the local issues, than it is to a third party property fund. Also there is going to be some upside for the council if the assets increase in value.”"

And simply assumed that rather than have the council sell off the assets completely to pay the pension fund, it'd be better to have them retain some interest in the properties...

27 October 2010 at 11:52

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