Robin Hood In Reverse

Here's a good example of the 'madness' of final salary pension schemes in the public services - how they rob from the pension poor and give to pension rich - how they operate like Robin Hood in reverse.

The other day it was announced that the head of the NHS in England and Wales - the much criticised Sir David Nicholson - is set to retire early next year on a pension of more £110,000 a year and a pension pot of £1.9 million - an astonishing figure by any standards.

Sir David will also qualify for a 'tax free' lump based on three times his salary - which is currently around £230,000 a year -  including his annual performance bonus payment of £20,000.

So he will walk away with well over £600,000 as a tax free lump sum and a guaranteed income of £110,000 for the rest of his life - even though he has earned that amount for only a relatively small part of his working career.

Because Sir David's final salary and is used to calculate all of his retirement benefits - and pays no regard whatsoever to the fact that for the first 20 years of his NHS career Sir David's  salary might have averaged less than a quarter of that amount - say £50,000.

Sounds bonkers, I know, but that's how these schemes operate - instead of being capped at some sensible maximum amount or being based on a person's average earnings over the length of their working lives.

So, in financial terms Sir David has won the lottery - and that comes on top of having made a very good living out of the NHS for many years - and ending his career with the scandal of 1200 unnecessary deaths at Mid Staffordshire Hospital ringing loudly in his ears.