Railpen is the pension scheme covering 500,000 current and former railworkers in Britain. According to a new book, What they do with your money, reviewed in the Financial Times on 18 June, it used to believe it was paying £75 million a year to financiers to manage its funds.
Then it probed further, and found that really £290 million was being sucked out of the pension fund each year in fees for "fund managers". Over 30 years, for example, that would be £9 billion, or over 40% of the total value of the fund.
"The finance industry is not designed efficiently to create wealth for others", comment the authors. "It has become positively awesome at creating wealth for itself". The financial sector takes 8% of total income of in the USA; in 1950s, when much more real investment was being financed, it took 4%.
The whole of high finance should be taken into public ownership, and its machine for enriching a few financiers should be replaced by a public, democratically-controlled, banking, insurance, and pension service.