Brown's £24bn Post Office windfall

[baldrick]

Government has never had a good case for privatising the Post Office.
Is it to get its hands on the pension pot?

JOHN RALFE, the pensions consultant did a public service over the weekend
when he blew the whistle on the Government's plan for the Royal Mail pension
fund which it will take responsibility for once the Bill to part-privatise the
postal service has got through Parliament.

Currently the Royal Mail scheme is funded - meaning that the mix of employer
and employee contributions over his or her working lifetime creates a fund big
enough to pay the pensions when they fall due. The alternative approach, which
applies to some public-sector workers, is pay as you go where there is no savings
pot so pensions come from current taxation.

The neat trick the Government plans to pull is to switch Royal Mail from funded to
pay as you go. This means that the entire existing Royal Mail pension fund will be
surplus to requirements, and its £24 billion of assets will therefore count as a
windfall for the Treasury. This is a time of course when any such windfall will be
more than usually welcome.

Of course it is all accounting trickery of the most dubious kind because there is
actually no windfall. In future the taxpayer will have to find the money to pay the
postal workers' pensions, and over the years that will account for much more than
£24 billion. Taxpayers may appear to do well out of the deal in the short term - and
the Government likewise - but that will be reversed in decades to come.

Perhaps there is no point to asking why the Goverment resort to such sleight of hand
because such acts have become a hallmark of Gordon Brown's politics both as Chancellor
and as Prime Minister.

But what this does do is cast doubt over the Government's motives in trying to part-
privatise the postal service. Its reasons for seeking to sell one-third of the business to
a foreign buyer such as TNT have never really made much sense, nor seemed to offer
much that the Royal Mail's management could not have done for itself. Now this revelation
about how the pension fund will be used will only raise further doubts as to whether the
privatisation plan is really for the good of the postal sevice - or simply a device to get its
hands on the pension money.

Anthony Hilton
City Comment
Business Section
London Evening Standard
Monday 11 May 2009
http://www.standard.co.uk" onclick="window.open(this.href);return false;

[baldrick]

The Government is reportedly looking for £3bn for a 30% share in RM
from a private investor. So the real money will be the £24bn they
get from stealing the pension fund.
:mfo

[banner18]

Perhaps they could put it down as 'expenses' ?