Link to this page: http://www.socialistparty.org.uk/issue/699/13400
"Seismic collapse" of private pensions
Government ministers have continually attempted to sow divisions between public and private sector workers over occupational pensions.
Pensions minister Francis Maude (£43,000 a year pension entitlement) has told public sector workers to pay more in contributions, work longer and retire on less. His justification for this £3 billion pensions' robbery is that the majority of private sector workers aren't enrolled in final salary pension schemes, therefore it's 'unreasonable' for public sector workers to continue with their 'feather bedded' pensions.
But who is actually responsible for the lack of defined benefit pension schemes for workers in the private sector?
The latest report from the Association of Consulting Actuaries says there has been a "seismic collapse" in private sector pensions. It found that most private sector defined benefit pension schemes were closed to new entrants and that four out of ten are now closed to future accrual ie existing workers in such schemes cannot build up their pensions.
Earlier, in December 2011, the National Association of Pension Funds found that 23% of private sector pension schemes were now closed to more contributions from existing workers and 81% were closed to new entrants.
In other words, private sector employers have pulled the plug on their workers' pensions schemes. This is due to cost cutting measures to protect company profits.
The demise of private sector workers' pension schemes has been going on for many years. It is the result of companies taking pensions contributions 'holidays' during the boom years on the stock markets. However, when the markets went belly-up in recent years it left many schemes facing a contributions 'black hole' and company bosses simply closed their pensions schemes.
This shafting of private sector workers' pensions by bosses (who continue to accrue 'gold plated' pension pots) makes a mockery of the government's workplace pensions automatic enrolment scheme which is meant to start later this year.
The lesson for all workers is clear - cutting public sector pensions will not improve private sector workers' pensions by one iota.
In The Socialist 4 January 2012:
Socialist Party NHS campaign
Socialist Party feature
Socialist Party news and analysis
Socialist Party events
Socialist Party workplace news
International socialist news and analysis
Socialist Party reviews and comments