Monday, 3 March 2008

Working Money

The Gazette’s internet site is highlighting one of the major financial problems faced by large scale employers – that of pension provision. Last year South Tyneside Council paid in over £20 million of contributions to the Tyner and Wear Pension Fund.

The fund, which has over 100 members, is one of the best managed in the country, and provides healthy benefits to thousands of members. However, £20 million is a lot of money, and as the Gazette highlights, Council taxes continue to rise within the band groupings.

In the parlance of the financial market, the fund is “flush”. If contributions similar to the amounts quoted continue, perhaps its time for a change in the rules which govern how the fund invests its money. Personally, I would prefer to see a heavier weighting for new business start up loans in this region. Young entrepreneurs are currently starved of funds, with banks being more cautious due to credit issues. What better way to use excess funds than to invest them in young people, eager to succeed, and living and working in the area the funds originated

The scenario?: pension funds help a new business grow, which in turn employs more people. These people then become members of the fund. Self perpetuating financial gain!

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