instagram arrow-down

About me

I founded and co-founded a couple of companies: Redington and mallowstreet; I write about issues of the day that touch me and make me think. Mostly about how to make things better.

Subscribe to my newsletter


Top Posts & Pages


Recent Comments


Pensions Policy Makers – Beware the Romanian Horses!

I owe my buddy, Paul McGill, an apology. Fifteen years ago, we disagreed over whether or not it was acceptable for Tesco and the other supermarket big boys to muscle out small high street shops that had sold high-quality produce for several generations. I reasoned that whilst it was undeniably unfortunate for the small butcher and baker, who simply could not compete with the hyper-stores, that was simply brutal commercial reality. Tesco and Co were able to offer the consumer greater choice and better quality at lower cost through their massive purchasing power. What was wrong with that? It was a win-win for everyone, apart from the butcher and the baker.


Paul vehemently disagreed – I seem to recall coffee cups getting knocked over in the heat of it – maintaining passionately that, in the long run, quality would inevitably decline as the supermarket giants relentlessly drove down prices and competed to the death.


A few years ago, when the BBC announced that, on the High Street, one in every eight pounds is spent in Tesco stores, I congratulated myself on sticking to my guns in the face of my friend’s powerful onslaught. Those guys are geniuses, I thought, lost in admiration.

But I was wrong and it seems Paul was spot-on. In the last few weeks it has become clear that in a nightmarish, scarcely believable tale of poorly-understood plots and sub-plots, extreme pricing competition, a complex global food chain, sleepy regulators and a government department that failed to read the signs, the beef bolognaise you last consumed could very easily have been Romanian horse bolognaise. Worse, it turns out that Romanian horses suffer endemically from some type of Aids-related virus, (Equine Infectious Anaemia) which is why they are subject to onerous export restrictions by the rest of Europe. (Want to know more? Watch this). It also turns out that it’s very straightforward to mince up a diseased horse (cost: zero Euros) and label it as prime quality, great value, beef (sale price: 500 Euros). You can understand the business model.

In addition and separately, although horses in and of themselves aren’t dangerous to eat (they taste like, er, beef), many horses (particularly race horses) are regularly injected with a strong painkiller phenylbutazone (“bute”). Horse racing in the United States is huge business. Horses are pushed to the very limit and, when they get hurt, they are often administered bute and then pushed some more. It’s horrifying reading. When they are finally put out of their misery, it appears the bute-filled horses are often exported to Europe where, because no-one is monitoring properly, they sometimes enter the food chain. If consumed by humans, bute causes aplastic anaemia and is potentially carcinogenic.


And then there’s some other murky connection with Poland.

For several reasons, then, you really do not want to be eating horse when you believe you are eating beef.

In short, there is intense pressure on supermarkets to deliver food at affordable prices in an austere environment where many people have little money to spend, at the same time as food production costs are soaring. Something had to give, and, as government food inspectors have been steadily culled due to limited resources, it wasn’t difficult for someone in the food supply chain to switch expensive, genuine ingredients for cheap, false substitutes. In fact, it was only because an enterprising food safety officer in Ireland decided to check for horse DNA, that any of this was uncovered.

Is there anything we can learn in our own pensions industry from this truly abysmal tale? Well, for a start, it is clear that any industry is only as safe as its regulator is competent. If he or she falls asleep on the job, doesn’t understand that a serious problem is unfolding, can’t spot the tell-tale warning signs and doesn’t have a game plan, things can and will spiral out of control.

The Pensions Regulator and the UK Government preside over a pensions industry in deep crisis.  Between them, there are major policy decisions to be made in the near future: Should pension liabilities be discounted using market interest rates and inflation expectations (as is currently the case) or should they be smoothed? To what extent should the corporate sponsors of defined benefit pension plans be obliged to fund the deficit? Should pension plan trustees be properly qualified and trained before they are permitted to make investment decisions?   Is auto-enrolment a good idea and, if so, has the government really thought through exactly how to make it work? What amount should we be obliged to contribute to our health care in old age? Since there is no money in the kitty, the government is under insane pressure to lift a little here, a little there, from pension benefits (like switching  pension inflation indexation from Retail Price Indexation to Consumer Price Indexation) – after all, it won’t be around when the chickens come home to roost in thirty years’ time. Should an independent expert body scrutinise these things in order to prevent the pensions equivalent of not-so-much a dog’s breakfast, more a Romanian equine lunch?

This horse / beef debacle is a blaring klaxon wake-up call to every regulator and government department. Now would be a very good time to sit with your strategists and advisors and think through all the possible nasty stuff that could be unfolding right now in your own back yard as a consequence of your actions, or inactions – as the case may be.


2 comment on “Pensions Policy Makers – Beware the Romanian Horses!

  • Tim Webb
    February 11, 2013 | 12:53 pm

    Maybe the analogy that could be used is DB as the high street shop and DC as Tesco. DC appears cheaper (and risk free), whereas DB more expensive (and riskier). There are more people thinking about whether the "all to DC" move was right in the same way some are thinking whether their local high street butcher (where they still exist) is safer. You shouldn't gamble with your health or retirement!! By the way I think the Findus product is correctly called "Spaghetti bologneighs"?

  • Dawid Konotey-Ahulu
    February 25, 2013 | 6:38 am


Love to get your thoughts

This site uses Akismet to reduce spam. Learn how your comment data is processed.