Beware pension vultures

THE website of private equity outfit Rutland Partners boasts that what distinguishes it from others is ‘the quality of the relationships we build’.

Not a description that will be much recognised by members of the Bernard Matthews pension scheme or the Commons Work and Pensions committee.

Frank Field’s panel outlines how Rutland rejected a buyout offer by the Boparan Private Office including the pension liability outright and, instead, decided upon a prepack administration.

Its objective in seeking the alternative structure was to protect a secured loan of £25m. This cut the amount recoverable by the pension fund to 1p in the pound.

A pension liability of £75m was catapulted into the Pension Protection Fund, which saw benefits slashed and the burden fall on healthy pension funds.

The despicable behaviour of Rutland is not unusual. The world of pre-pack administration is being used by ruthless private equity firms and others to slough off obligations to pensioners and other stakeholders and steam on to make a quick buck.

No one disputes that, as a result of various Government interventions, defined salary pensions have become less affordable. That is no excuse to break a social contract.

When the Royal Mail was privatised in 2013 it only became possible after Chancellor George Osborne took on responsibility for the Royal Mail pension plan.

The Government took the £28bn of assets onto its books and swallowed the liabilities, around £10bn higher, paying them out of current income.

The existing workforce of the Royal Mail of around 90,000 was placed in a new defined pension plan that is currently reckoned to be in surplus although a new valuation is expected to show a deficit.

As an early Easter present the Royal Mail now wants to close the new scheme down and replace it with something cheaper. That is not unusual. Companies all over Britain have done the same. What is unusual is that the scheme is relatively new and at the time of privatisation there was an implicit promise that pensions would be protected.

The postal union, the CWU, is up in arms and who can blame them.

A badly thought-out plan means that, unless the Royal Mail comes up with a generous offer, post will pile up and a business stressed by email and competition from upstarts such as Amazon will crush it.

Adele factor

WHEN we think about the global reach of Britain’s services sector, finance comes to mind. HSBC and Lloyd’s of London are hugely important and give the City enormous leverage. But it is too easy to forget the contribution of creative industries because Adele, Coldplay and the late David Bowie somehow seem less consequential.

Latest data from the British Phonographic Industry shows that music earnings jumped by 5.1pc last year. The two fastest-rising formats were streaming services, such as Spotify, jumping 60.6pc, and vinyl LP sales, up 66.5pc.

Vinyl now accounts for 50pc of the shrinking category of physical music sales, which came in at £298m last year.

The biggest swing is away from downloads to the use of streaming sites. Illegal sites still rob the industry and artists of their rightful income.

As streaming becomes more important the sums flowing back to artists become smaller, damaging investment in creativity.

Amid all the noise coming from other parts of the economy about Brexit, the contribution music makes does not receive enough attention.

The sector needs reassurance that the right of artists to tour Europe is not inhibited, illegal websites are combated and artists streamed on platforms controlled by digital giants receive proper royalties.

Is the nation’s Culture Secretary, Karen Bradley, listening?

Unfriendly skies

WE ALL have a price and United Airlines’ biggest mistake in seeking to lighten the load on its notorious Chicago flight was to limit the cash it offers to passengers to be offloaded to £800.

Costs in terms of the share price plunge and compensation to Dr David Dao could be in the hundreds of millions of dollars.

As for chief executive, Oscar Munoz, he is a dead duck.

As the boss of Wells Fargo, John Stumpf, learned last year, it is public humiliation which gets you.