Funds Hub

Money managers under the microscope

Pensions, mergers and the Spanish (and otherwise) Inquisition

April 16, 2010

Spare a thought for the UK Pensions Regulator:  is losing its CEO next month (to a new agency set up to educate the UK public on money and financial matters) right at the time when its actions will be scrutinised.

Iberia and BA are telling the markets they want to merge, but the 3.7 billion pound BA pension deficit is also telling one or two things to the shareholders and investor squad. That is why what the Pensions Regulator says to BA’s plans to face the pension black-hole is very important.

Will it approve the plan? Will it require more cash? Will Iberia stomach any additional contributions?

Whatever it does, the regulator is bound to attract criticism and in the full glare of international publicity: if it asks for more assets and Iberia leaves, it will be blamed for scuppering the deal.  If it agrees to the BA recovery plan, some will say it let the air carrier off the hook.

I see the holy fathers of the XXI century Spanish Inquisition — aka media, analysts, shareholders, stakeholders etc — gather to pass judgment  on this pension conundrum.

Or to put it in aviation terms: the regulator is in for a Catch 22 situation, and just for doing its job.


The Iberia deal is less important than that BA and others stop using worker’s pension funds like they were theirs to speculate with, period, and pay out.

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