Mervyn king - pension

[dulwichgirl2]

Am I the only one who thinks it ridiculous the man in charge of inflation has an index linked pension?

It is a clear conflict of interest. No-one whose remit it is to keep inflation down should have an interest in high inflation for god's sake!

[flocker spotter]

you do understand how inflation works, yes ?

[Huguenot]

Inflation isn't supposed to be kept down, or there is no incentive to trade - it needs to be usually around 2% - 3%.

Whether Mervyn King is impacted by this will depend upon what index his pension is linked to. If his pension is linked to the retail price index the he won't be bothered by changes in inflation as his pension will always have the same purchasing power. Hence he wouldn't have an interest in either high or low inflation.

[dulwichgirl2]

Exactly - the test of the country will suffer from high inflation whereas MK will not.

Flocker, yes thanks I do. Do you understand how civil service pensions work?

[Mick Mac]

MK may get an indexed pension but he will not have any influence over inflation when he is no longer working. What's your point.

[woodrot]

Its doesnt follow that the BoE has to keep inflation low - its a bit more complex than that, as is any discussion of the various machinations of how/ what kind of inflation is benchmarked - this is another discussion entirely I think though, given the political uses of any inflation rate produced and the publics understandable linear thinking of high vs Low inflation.

Blates the next question is whether the BoE slots into and is classified as part the normal civil service pension structure - and on this, I have no idea.

Given Merv is on a decent wedge and will invariably find himself a few nice directorships afterwards, maybe its not exactly going to kill him whether his monthly incomings are RPI or CPI linked

[LondonMix]

For some civil servants avg. lifetime earnings are indexed pre-retirement as part of the civil service pension. However, Dulwich Girl, the point people are trying to make is that linking a stream of cash flows to inflation at best protects you from the impact of inflation but you cannot gain anything in real terms. Mervin King therefore is not incentivised to generate high inflation. Unless you are suggesting he is trying to arbitrage CPI vs RPI or something...