Pension Fund Trustee forced out

The news that the Chaiman of the EMI pension fund trustees was forced out for supposedly demanding that EMI tops up the fund shows that the regulation of pension funds is inadequate and creates similar problems of moral hazard as can be found in other segments of the financial service industry. Employees are generally discouraged not too put too many eggs in one basket and avoid excessive exposure to the shares of their employer. That way they avoid being hit by a double whammy should their employer hit trouble. In that case, not only would they risk losing their jobs but their investment would also be diminished at a time when they need it most. (This is a dilemma for all advocates of increased employee share ownership participation). Having one's old-age retirement provision dependent on the fortunes of the employer - over which the average employee has no influence at all - is a risk that should be eliminated in any sensible pension fund legislation. Companies subject to financial engineering that has very little to do with sound management but more with boosting the personal wealth of a few managers at the control - mostly in the so-called 'Private' Equity sector - are most at risk of neglecting the best interest of the pensioners past and present.