The Worst School in Britain
Suddenly there’s a rush with three www.thepensionsadvisoryservice.org.uk pre-retirement presentations in two days in Hackney. Second day finds me at http://www.mossbourne.hackney.sch.uk/ on Hackney Downs a brand new academy on the site of the former Hackney Downs School. The latter was originally founded in 1876 by one of the City of London’s Livery Companies, The Worshipful Company of Grocers. It became a grammar school for a while with some distinguished alumni including: playwright Harold Pinter, actor Michael Caine tycoon John Bloom who brought us cheap washing machines in the 60s and darts professional Eric Bristow. Come 1974 this successful school went comprehensive and standards went down the toilet resulting in the school being dubbed “the worst school in Britain” by the government eventually forcing it to close in 1995.
Out of the ashes stands a brand new school in a very modernist building now a thriving sixth form academy and I am asked to give a pre-retirement presentation to about 90 teaching staff and afterwards, about 70 support staff. Everything is set up when I arrive in the huge auditorium which can seat 300 people. The audience is the largest I have ever presented to and the average age is by far the youngest. My gut instinct tells me that quite a few are ex-City people as they are a bright lot and the interaction is great fun.
Next presentation for the support staff is less interactive, easily visible from the passive body language. Many are foreign and English may not not be their first language. No point in using funny anecdotes if these go over their heads, so I have to simplify things a bit. Main point is that both the Teachers’ Pension Scheme and Local Government Pension Scheme are final salary schemes (or Defined Benefit Schemes) where the investment risk or cost of maintaining the value of the pension the employees earn is carried by the employer meaning government meaning the tax payer. The effective contribution to do this is around 18 per cent of earnings a year with a third from the employees and two thirds from the employer – ruinously expensive and unsustainable. For the members concerned, best make hay while the sun shines and earn these lovely pensions while they are available.
With both audiences, about one quarter are not receiving any benefit statements at all and one member had opted out as she completely misunderstood how the scheme worked. My talk apparently results is a rash of phone calls to the schemes offices and the above-mentioned lady opts back in.
Just Do It!
Plenty of questions after the presentations and it occurs to me that the school might benefit from a visit by someone from www.3Cscommunity.com as the school must include a few would-be entrepreneurs? One of the staff mentions that his son has done this already with http://www.green-oil.net/ starting his eco-friendly bike lube business from a garden shed! Perhaps the Just do It! slogan now adopted by Nike helped here? Next 3Cs meeting is in September.
The Feeling is Mutual
An insurance company or in this case Friendly Society announcing that it is not taking in any new business is usually ominous especially when the society says it has “nothing to do with solvency”. This is about as believable as an obese person saying that their excess pounds are nothing to do with their diet. The coalition’s sensible early announcement to scrap Child Trust Funds http://www.childtrustfund.gov.uk/ has affected several Friendly Societies who depended on them for much of their new business. Largest of them is http://www.thechildrensmutual.co.uk/ formerly Tunbridge Wells Equitable Friendly Society with about a third the the Child Trust Fund market, announced this week that it is not taking any new business?
Friendly Societies are a bit of a relic from pre-Welfare State days and have the advantage that some of their funds grow tax-free. Even with this tax break, high charges make them expensive investments and not brilliant performers and since many are with-profit funds, even worse. With-profit funds have been poor performance for a while, even when the FT-SE 100 index has gone up by 40 per cent in a year. Friendly Society names throw an interesting light on our history. Some were respectable while some were not being basically drinking clubs where if someone was hard up, a hat was passed round and people put in what they could (see below). More history here http://www.historyshelf.org/shelf/friend/12.php but for me, the cutest one perhaps is http://www.shepherdsfriendly.co.uk/
An old Christmas song:
Please put a penny in the old man’s hat.
If you haven’t got a penny, a halfpenny will do,
If you haven’t got a halfpenny, then God bless you!