Should we use the term 'pension zombie'?

Until 10 days ago it was more a piece of grim humour, rather than a term that advisers in our industry made public utterances on.

To the best of my knowledge that changed when KPMG put out a press release about the unfortunate demise of the AEA Technology Group – an offshoot of the once-mighty Atomic Energy Authority.

The accountant has just been made administrator and put out a statement that the business “fitted the ‘pension zombie’ bill as, despite its operational profitability, its pension scheme liability dwarfed revenues”.

It was probably only a matter of time before someone made this announcement and said what many were thinking, but I fear such language can only lead to trouble.

One recalls how remarks made to draw laughter from an audience by Gerald Ratner led to the forced sale and rebranding of his national chain of jewellery shops.

In July, PwC put out a report in which it expected a spate of insolvencies from household-name employers caused by their pension scheme liabilities dwarfing revenues.

For some, insolvency might not be a foregone conclusion, but if the term ‘pension zombie’ does become common parlance when the public talks about certain household-name companies then it will tip the balance.

It all serves to highlight the incredible role that trustees, advisers, the regulator and the PPF have in managing the endgame of private sector defined benefit schemes. And, dare I say it, the emphasis this puts on government to intervene.

Arguably, we should be using the term pension zombie in industry conversations but not in public announcements likely to reach the national media.