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Pension funds could take on a new role — as barometers of what organisations really think but do not like to say in public. It appears, for example, that the trustees of the Northern Rock pension fund want the scheme either to be topped up or to be given some form of additional security.
Their reason for wanting an additional guarantee now is because the trustees have doubts about the ability of Northern Rock's management to restore the company to health, and therefore its long-term ability to stand behind the scheme.
This is not unreasonable given what is happening in the housing market. It does, however, rather embarrass the Government, which insists the pension scheme has nothing to worry about as HMG stands behind Northern Rock. Indeed, it says the fund should be investing gung-ho in equities because it is so secure it can take a high level of risk.
The trustees, though, would appear not to trust the Government and its pledge always to be there for Northern Rock and its pension fund when needed. There is a stand-off, and so entrenched are the two sides that the Pensions Regulator might have to come in to facilitate a solution.
The truths in Northern Rock's position are matched by issues raised by the Bank of England pension fund.
The Bank, through the monetary policy committee, as we all know, is leading the fight against inflation. The Bank's pension fund, meanwhile, has recently sold all its equities, all its property and even disposed of its immature private-equity holdings. In the past few months the whole lot has been reinvested in inflation-linked gilts.
De-risking the pension fund in this way is hugely costly and you have to wonder at the signal it gives. The Bank urges us not to succumb to inflation, while its employees' pension fund prepares for that very eventuality.
