Yet even after this huge mobilisation, the level of retirement provision for those dependent on Nest and similar defined-contribution schemes will be beggared by what is sucked into defined-benefit schemes. This is apparent from my chart, adapted from the excellent annual review, Accounting for Pensions, published by Lane Clark & Peacock.
Last year, FTSE 100 companies paid £4bn into defined-contribution schemes, but a towering £17bn into defined-benefit - or final-salary - schemes. The latter figure comprised £11bn to reduce deficits and a further £6bn of regular contributions representing the increasing entitlements of those still accruing benefits under such schemes - 20 years after smarter operators identified defined-benefit pension schemes as a fanciful luxury, many remain open for existing members.
On their behalf, employers typically pay 17 per cent of payroll, whereas the contribution rate for defined-contribution schemes is only 8 per cent.
FTSE members have to tie themselves in knots to maintain rich promises made decades ago. In 2010, Barclays' pension deficit stood at £5bn. Last December, as it wrote out a £1.8bn cheque towards rectifying this position, the deficit had risen to £6.4bn. This year, BT scraped up £2bn towards its deficit and promised to pay £325m a year for nine years to eliminate it altogether.
According to Lane Clark, 10 FTSE 100 companies last year paid more to their pension funds than to their shareholders, eight had issued guarantees to their pension funds, seven had created escrow accounts in favour of their pension funds, at least five had granted funds a charge over company assets, and 10 had set up business partnerships giving their pension funds direct access to corporate profits.
The beneficiaries of these enormous sums of money are a generation of people who by the accident of being born at the right time were offered generous pension schemes when they started work and who by accident of dying at the right time - much later than first expected - will cost those pension schemes far more than anyone appreciated when the pension promises now proving so burdensome were made.
Their number is not easy to estimate. In truth, the question in my chart, "Which one do you get?" is tongue in cheek. Relatively few people - just those who joined in recent years - working for big companies will never have had access to a defined-benefit scheme. Most such employees will have joined defined-benefit schemes and later moved into defined-contribution schemes. Lucky older people will have had many years of generous accrual; unlucky younger people only a few years. The number of people still working who will retire with full defined-benefit pensions must now be pretty small.
We need only refer in passing to retirees drawing defined-benefit pensions. They had the cream. And via those deficit contributions, they are having a lot more. Public sector pensions: let us not go there.
From the point of view of the employee or pensioner entitled to a final-salary-linked pension, the entitlement is of course sacrosanct. Indeed, many more people who are not beneficiaries would take the same view. But the cost to younger employees, to customers and to shareholders of honouring these pensions is iniquitous. And will become more iniquitous for perhaps another 20 years. Who is to say that by the time BT finishes this deficit recovery plan, it won't have to start another twice as big? Who will protect the rest of us against that?
Companies cannot rectify this problem. These pensions will have to be honoured. But the burden on the rest of us could be relieved by a final-salary pension tax.
