Government attacks on pensions: Don’t welcome them, fight them!

Submitted by Tubeworker on 16 August, 2006 - 9:18

The TUC welcomed the Government's White Paper on pensions, published in May. Only the week before, it had set out five "bottom-line" tests for the White Paper. Even on a generous reading, the White Paper passed only one.

Test no.1: restoration of the linkage between the basic state pension and average earnings. But the White Paper offers restoration only as from 2012 - with wiggle room to 2015, and then only on the basis of "affordability".

Test no.2: a better deal for women. The White Paper proposes that you will need 'only' 30 years' contributions to get the full basic state pension, with some special arrangements for those who stay at home as carers. This should allow 70% of women by 2010 to receive the full state pension.

But occupational pensions in the public sector - where most women work, often in low-paid jobs - are losing benefits and rights. What is given with one hand is taken back with the other.

Test no.3: the cost of pensions be more evenly shared. The state pension age for men and women is to rise to 66 by 2030, to 67 by 2040 and to 68 by 2050 - with no account taken of differences in life expectancy. An extra year before you can claim your pension may not make much difference if you expect to live another 15 years, but if you are poor and likely to die at 66, it's everything.

Test no.4: employers should have to contribute to pensions. After 2012 all workers not in a company scheme will be enrolled in a new National Pension Savings Scheme. Employees will contribute 4% of earnings, the employer 3%, and the government 1%. The CBI complains that this is unaffordable and will be paid for by lower wages. But the proposal just confirms the longer-term retreat of employers from occupational schemes.

Employer contributions used to be 12-15%. New Labour has let big business get away with abandoning this basic commitment to workers with a cut-rate alternative, which they want us to pay for through a smaller wage packet. The money employers saved by cutting contributions has gone into the profits, share options and generous pensions that keep the bosses fat and the division between rich and poor growing fast.

Test no.5: the scheme should be simple, secure and low cost. The National Pensions Saving Scheme may well be managed by the private sector, where the motive is profit and the vast sums involved will be outside democratic control or oversight. New Labour's glorification of the market and hatred of the public sector makes it unconcerned about providing a secure, publicly-provided framework for the future of pensions.

So, apart from a compulsion for employers to contribute (only 25% a quarter of what they used to), none of the TUC's tests have been met. Yet the TUC welcomes the White Paper! Instead it should have drawn a line over the retirement age and the prospect of making workers pay more.

Pensions are deferred wages, a guarantee of retirement income taken from the labour you put in during your working life. In the past 20 years as occupational schemes have collapsed or been closed, those future wages have been stolen. It amounts to a massive wage cut for most workers.

If a boss came and told you that from next week you would get 10% less in your pay packet, despite increased productivity and an increased working week, you would object and call on your union to act. That is exactly what has happened by stealth over the last twenty years - but the unions have not fought.

It's not too late to act to defend those pension schemes that still exist and demand real pension reform that looks at problems from the point of view of the workers who are being expected to pay, not the bosses who are looking to save money for themselves and their shareholders.

  • No increase in the State Pension age.
  • A decent state pension linked to earnings now.
  • Make the bosses pay: tax the rich and levy business profits.

Add new comment

This website uses cookies, you can find out more and set your preferences here.
By continuing to use this website, you agree to our Privacy Policy and Terms & Conditions.