IF YOU need to understand why this Government can't see a crisis in pensions, consider the extinction of that pair of 40watt bulbs from the Labour chandelier, Melanie Johnson and Stephen Twigg. Both were thrown out by their constituents, but their disappointment will have been tempered by going-away presents from the taxpayer of half their salary, plus a further quarter of the extra payment for being a minister.

These payments are merely a bonne bouche compared to the pension rights accrued during their eight years in Parliament. At one fortieth of salary a year, that adds up to one fifth of final salary, a pension which would cost around £200,000 to buy on the open market. This is why MPs avoid the subject, except when the howls of rage from the likes of former Turner & Newall workers are too loud to ignore. The response has been classic Labour: commission a review, this one under "Red" Adair Turner, timed to report after the election, and rush through some botched legislation to head off the immediate problem. The Pensions Act brought much-needed consistency in the rules governing different types of pensions, but has sounded the death knell of final salary schemes.

The Act completes the transition of pensions from a promise to try to look after former employees in their old age to a formal liability on the company, as onerous as a bank debt. While most companies could probably find the money in the future when it was wanted to pay the pensioners, very few will be able to set it aside from today's income. As the figures we disclose today for Marconi show, the liability is a blight over the business sufficient to make raising further capital almost impossible, and to deter all but the strongest bidders. The first question every buyer asks tday is: what's the liability in the pension fund? The new rules make a fine poison pill for incompetent managements, acting as a serious disincentive the risk-takers without whom companies gradually decline, eventually to the point where there's nothing left for shareholders or pensioners. None of this is likely to discomfort our legislators, whose slogan for pensions, as Ms Johnson and Mr Twigg now know, is: I'm all right Jack.

General Election Results - 2005
646 Seats