I thought it was time I took a look at the latest accounts from the Bank of England, which bizarrely are, as ever, to 28th February 2023 and not 31 March as company law would seem to require of a subsidiary of HM Treasury, which accounts to the latter date.
There will be more to discuss but I noted this first of all in the light of Bank of England comments on pay restraint:
Average salaries have risen from £68,006 to £69,603, or by 2.3%.
However, on top of salary, the average pension contribution has gone up from £17,112 to £20,317, which is an increase of 18.7% in the year.
Combine the two and costs have risen from £85,118 per person to £89,920 a year, or by 5.6%.
So much for pay constraints.
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I’m not defending the BoE but I don’t think you can be certain that they have directly increased the pension contributions payable to employees. One explanation could be, for example, that they have a sliding scale of matching contributions and employees have chosen to put in more this year, thus increasing the amount that the employer has to put in.
The BoE scheme is, I gather, non-contributory (staggeringly).
Maybe not so staggering – the pension debit is almost 30% of the basic salary cost, so presumably the BoE pension scheme is non-funded, like so many public sector schemes. When the Tories increased civil service pension “contributions” in 2012 (and for balance Labour was in favour of doing something similar) I found myself making greatly increased “contributions” to a fund that didn’t exist, as civil service pensions are paid out of current government incomings.
The point remains, though, as PSR says, they are being very well rewarded for their stupidity.
Good knowledge! I was thinking about this further. The main reasons that I can think of as to why the pension contributions might go up are:
1. The Bank has increased the contribution rates.
2. There are different contribution rates for different categories (e.g. age-related) and so the average contribution rate could have increased without any change to the underlying contribution rates.
3. Salary used to determine the contributions has increased.
4. Some other reason, e.g. one-off contributions.
It’s not clear whether 1. or 2. have contributed. It’s clear from the rate of pay increase that 3. has not really contributed (2.3% vs 18.7%). Perhaps there is an element of 4.? The annual contribution figures have certainly been a bit uneven: £64m in 2020, £84m in 2021, £80m in 2022, £101m in 2023. Perhaps there is an element of 4. going on?
The answer is, I think, the pension was in deficit
The notes suggest the scheme is in surplus, and in any case deficit contributions would not appear in staff costs (they’re usually cashflows that don’t change the net assets of the company). It’s probably something to do with the other post-retirement benefits, which includes redundancy provisions.
Anyway, I will stop going on about it now, but my conclusion is that there’s not enough information to conclude that they have awarded inflation-busting increases to pension contributions.
Surely that is all we need to know about the BoE’s stupid behaviour.
Put simply, they are being paid well to be stupid.
As is often the case these days.
The do as we do not as we say public clown company. If ever there was an opportunity for Andrew Bailey to set an example here it was on Bank of England pay and the clown blew it! The British are nutters putting up with so much hypocrisy by the establishment. I wonder what is going on with regard to pay amongst the upper echelons of the Treasury Department.
China now in deflation and cutting its base rate below 2%. Quick somebody buy Andrew Bailey a one way ticket to China!
http://mikenormaneconomics.blogspot.com/2023/07/china-in-deflation.html
Maybe we should send the Chinese Andrew Bailly
Deflation problem chaps? Nae bother to the Bailster. I have the policies.
Mr. Murphy,
Keep up good work!
They seem to be heavy on the managerial staffing?