The FT has noted a report this morning that suggests:
Britain's biggest companies paid their shareholders five times more than they spent tackling their pension deficits last year, according to a new analysis that is set to reignite the debate over dividend payouts.
As pension shortfalls rise to new highs, research published on Tuesday showed that FTSE 100 companies with “defined benefit” schemes, which offer a guaranteed income in retirement, paid £71bn in dividends last year compared with £13.3bn in pension contributions.
So here's a simple idea for Labour leadership candidates: why not suggest a straightforward change to the law that says no company is allowed to pay dividends whilst running a pension deficit?
It would not be hard to do or draft.
It would be very effective.
And it would make clear who Labour thought was the more important and committed contributor to the success of a company when the choice has to be between its employees or providers of capital.
Putting labour first should come naturally to the Party, I would have thought.
PS The idea is open to others as well.
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This is so obviously wrong – I mean it’s bare faced cheek really. The laws that put investors before anything need to be repealed and modified to a more balanced form.
It’s so obvious that you wonder why none of the parties pick it up. But then again it just illustrates the neo-lib hegemony in areas like business and economics and also politics.
Such ideas need to be smashed really because what you have described here is a method by which money is transferred from the 99% to the top 1%.
So pensions are unaffordable – but only because the investors must be paid first – but not even that – investors must be paid more every year and therefore pension pots must be sacrificed.
It’s lame really, just lame.
This is the best idea of seen in ages for a simple practical solution to the problem of pension shortfalls. Also really easy to sell on the doorstep. Also wondered if you think it would be possible to make a change the law that says no company is allowed to pay dividends whilst they are in debt to tackle problems such as the Southern Cross Healthcare debacle?
In principle they cannot pay dividends whilst insolvent already
I am just saying make it tougher re pensions
Well then those companies will just switch to money purchase pension schemes, as was the case in the late 1990’s when Gordon Brown abolished the tax relief pension funds earned on dividends from stock market investments. Final salary or defined benefit schemes are almost extinct as a result of that tax change in 1997.
Justin,
A simplistic conclusion.
You have ignored the effects of the millennium stock market crash and the demographic time bomb.
It would appear that you disagree with Danny Blanchflower on this one. When Corbyn suggested companies could be barred from paying dividends if they don’t pay the living wage Blanchflower said “No more silly stuff about companies not being able to pay dividends if they don’t do X or Y. If companies are not allowed to pay dividends, share prices will potentially rise instead.”
That is wholly different
I am talking about meeting liabilities
The policy that was rejected was about enforcing the living wage which is entirely different
But I assure you, it’s also possible for Danny and me to disagree