But what of the argument itself? According to this report it appears that while HL is saying that the public sector should shift to defined contribution provision, the current level of contributions should be maintained.
It is the contribution rate that matters, not the benefit structure. Current contribution rates to defined benefit schemes would be sufficient to buy contracted in money purchase pensions for public sector workers of between 45pc and 50pc of final earnings.
Of course the contribution rate matters, but if the contribution rate stays the same then ...errr... provision doesn't become any cheaper. So why change it? All you are really doing is saying 'public sector workers must experience more risk'. But that's not quite as snappy as 'pensions apartheid' I guess.
And actually if you are paying the same level of contributions into a scheme you're actually more likely to get lower costs in DB than DC. That's in part due to economies of scale and in part due to the admin hassle of lots of individual pots under a DC scheme. Funnily enough one US pension fund has just sussed this out:
West Virginia lawmakers were informed Monday that the movement of nearly 15,000 teachers and educational workers from a defined contribution plan to a traditional pension plan will shave about $22 million off - that’s right, shave OFF - the state’s retirement benefit expenses. The estimate given to lawmakers by state actuary Harry Mandel was radically different from early statements that the DC to DB migration would actually cost the state as much as $78 million to subsidize pensions for teachers and service personnel who transferred to the Teachers Retirement System but had limited assets in their Teachers Defined Contribution (TDC) plans.
Hat-tip: Corporate Governance
HL, unlike the TPA, does at least acknowledge the much bigger problem of poor provision in the private sector.
In the US the unions would take this kind of lobbying for an attack on employees' benefits seriously and take it up with the company. See for example the campaign against State Street when they started lobbying in favour of social security privatisation. I can't see any reason why companies like HL shouldn't be held similarly accountable in the UK.