National Grid Final Salary DB Scheme

C_Mababejive

Of course one of the not insignificant issues facing NGPS is the interference from OFGEM in the last year which has now prevented NG from passing through some of its ongoing pension costs via the RIIO regulatory framework. Pensions are a cost of employing people and yet OFGEM has interfered and prevented for proper accountacy of it. Of course the people at OFGEM ensure that their pensions are well funded but then the rules are different for them arent they...

http://www.pensionsage.com/pa/Ofgem-pensions-proposals-are-anti-defined-benefit.php

jamesd

Ofgem seems to be doing its job, potentially preventing excessive costs from being passed on to consumers, though things have moved on from that old 2009 news story that lacked any details of what was being considered.

The proposal seem sensible, though inherently unfair to current consumers.

For the old defined benefit schemes from when the utilities were in the public sector, the firms wouldn't be allowed to pass through deficit recovery plans that take less than fifteen years. Given the long timescale of pension liabilities and the short term ups and downs of markets that can temporarily inflate apparent deficits above their real level that makes sense. It's fundamentally unfair to current consumers because they are being made to pay for liabilities accumulated while the firms were in the public sector, which should really be done by having the public sector retain those liabilities, as happened with the old Post Office scheme prior to privatisation.

For ongoing costs of current pension contributions, normal pass-through, though with incentives for reducing costs for consumers to try to prevent pensions being used to produce uncompetitively high costs by exploiting the mandatory passing through of costs.

While the old DB part is unfair to consumers, Ofgem isn't in a position to force central government to pick up those old liabilities, so we're stuck with a second best solution.

chainsaw

So a couple of years or so on I am reading this thread. At the time people are saying the NG scheme was valued at 14 billion? I know the last official valuation was about 15.5 billion in March 2013 and if we visit the Aerion Fund web site, thats the people who run the NG pension they say the value is now 17.3 billion. What a massive improvement in a short space of time and we have still not made any changes to the pension scheme yet.

I may not know completely what I am talking about but I do know when I am being had.Jamesd???

chainsaw

jamesd wrote: »

Ofgem seems to be doing its job, potentially preventing excessive costs from being passed on to consumers, though things have moved on from that old 2009 news story that lacked any details of what was being considered.

The proposal seem sensible, though inherently unfair to current consumers.

For the old defined benefit schemes from when the utilities were in the public sector, the firms wouldn't be allowed to pass through deficit recovery plans that take less than fifteen years. Given the long timescale of pension liabilities and the short term ups and downs of markets that can temporarily inflate apparent deficits above their real level that makes sense. It's fundamentally unfair to current consumers because they are being made to pay for liabilities accumulated while the firms were in the public sector, which should really be done by having the public sector retain those liabilities, as happened with the old Post Office scheme prior to privatisation.

For ongoing costs of current pension contributions, normal pass-through, though with incentives for reducing costs for consumers to try to prevent pensions being used to produce uncompetitively high costs by exploiting the mandatory passing through of costs.

While the old DB part is unfair to consumers, Ofgem isn't in a position to force central government to pick up those old liabilities, so we're stuck with a second best solution.

You talk about the old DB schemes as if they are,,,, old! They exist now and many people pay into them. I am coming up to pension age and I work for NG. the vast vast majority of the time I have and will have paid into the DB scheme the company has been a private company.

The pensions most people got when the company was nationalised were nowhere near as good as now and many improvements were won whilst the company was a private company.

I agree that it could be argued that customers are paying too much for gas transportation via NG but is that because of the possible 3 or 4 hundred million NG might have to pay into the pension pot over 10 years (having raided it in the past and see my post below re the scheme being worth 17 billion) or because of the 3.5 billion profit they make every year?

kidmugsy

atush wrote: »

I do think that executives should have the same pension as the workers though, at the same accrual rate and same contribution. After all, they get bonuses and share incentives on top.

Yeah; the sneer at the executives was perfectly fair but perfectly irrelevant.

kidmugsy

chainsaw wrote: »

or because of the 3.5 billion profit they make every year?

He who objects to his employer making a profit should examine his sanity.

kidmugsy

chainsaw wrote: »

I know the last official valuation was about 15.5 billion in March 2013 and if we visit the Aerion Fund web site, thats the people who run the NG pension they say the value is now 17.3 billion.

Valuation of what? Is that just the assets? What is the valuation of the liabilities?

chainsaw

kidmugsy wrote: »

He who objects to his employer making a profit should examine his sanity.

I have not objected to NG making a profit

chainsaw

kidmugsy wrote: »

Valuation of what? Is that just the assets? What is the valuation of the liabilities?

I am using their figures, if I remember corrrectly the scheme was between 4 and 500 million underfunded and since that was said the valuation has gone up 1.8 billion so there should be no problem amd my main point is that has happened in two short years without the need to make the members pay any more.

I return to my point several decades ago we were told we never needed to pay another penny into the scheme there was so much money in it but we paid in anyway and now there is a short fall. I don't believe it

chainsaw

kidmugsy wrote: »

Yeah; the sneer at the executives was perfectly fair but perfectly irrelevant.

They can also get massive pay rises in their last 3 years at the company in order to boost their pensions enabling them to take a disproportionately large pension compared to their overall contribuctions