Link to this page: http://www.socialistparty.org.uk/issue/424/4961
City greed hits workers' pensions
MILLIONS OF workers expecting pensions on their retirement will be hit by a crisis in the numerous pension funds. The City of London's gilts market has had its lowest yields in half a century and pension funds are suffering.
Gilts are government bonds and interest is paid on these investments with supposedly watertight guarantees, so they should give pension funds a secure basis.
However, since the start of 2006, the FTSE 100 companies' combined pension deficit rose by £35 billion to £110 billion due to tumbling revenue from gilts. Many private company pension schemes were already seriously underfunded after the bosses took long-term pension holidays - i.e. opting out of making any contributions - in the 1980s and 1990s.
Companies only increased their contributions by £8 billion in 2004 so the bosses want a £35 billion increase in contributions to be paid by workers.
Scottish and Newcastle (S&N) breweries' bosses have told their employees that they will have to shell out 6% of their pensionable pay to stay in their final salary pension scheme - it had been 0% before. They also want to persuade workers to go onto an inferior career-average scheme.
The gilts crisis shows that workers cannot rely on private pension funds. It will probably be an excuse for even more back-tracking by the capitalist class. The trade unions in both private and public sectors must organise against this onslaught, starting with the vital ballot for industrial action by local government workers!
In The Socialist 26 January 2006: