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From The Socialist newspaper, 19 June 2004

Pensions

Hands Off Our Pensions!

THIS SATURDAY, 19 June, thousands of workers and pensioners will join a TUC-sponsored demonstration in protest at the great pensions robbery being carried out by money-grubbing private companies and their accomplices in government.

For decades successive governments have shifted responsibility for providing everybody with a decent retirement income from the state to private sources.

The basic state pension has been declining over 20 years while the state pension number two (SERFS) has been replaced more and more with schemes relying on private pensions.

State pensions have been under attack since the link between pensions and earnings was broken in 1980. Tory minister Peter Lilley said this step would make the state pension "wither on the vine".

As earnings usually rise faster than prices, by 2020 the pension will be only 10% of average earnings. Before 1980 it was 20%.

Working people are angry. Many employers aim to replace the final salary schemes which at least guarantee a pension with inferior fixed contribution schemes which depend on the stock market's highly erratic behaviour.

Back in 2002, the TUC estimated that the employers had already saved themselves £4 billion in contributions by this change of method. Even before this the bosses saved themselves £18.5 billion in contributions 'holidays' and reductions in the 1990s.

Employers now pay on average well over £2,000 a year less on a fixed contribution scheme than on a final salary scheme.

So workers would have to pay at least £40 a week to match the level of employer contribution -and all for inferior levels of benefits on retirement.

Already experts say you need to save 15% of your pay from the time you're in your 20s to make sure you get a decent pension. But if you wait till your 40s, the percentage increases to 24%! It's an attack on the whole working class of all ages.

It's good that the TUC - on the initiative of the PCS civil service union - has called this demonstration. But this is just one of a series of attacks on working-class people's pay, conditions and future welfare.

This demo should be the springboard for more action against the attacks of the bosses and the government.

In the private sector, the unions should give full support to strikes against greedy bosses. Some have already broken out, in the steel industry for instance.

In the public sector where the government want 60% of retirement income to come from private sources in future, the unions should make the call at this demo for a one-day strike of all public sector workers and to link up with workers in other sectors.

If that happens, this could prove to be one of the most important demonstrations in recent history and start a real fight back against Blair and Co's attacks.

Pay up for Pensions

TUC march and rally

19 June, Assemble 12 noon, London Embankment.

Rally in Trafalgar Square, 2pm

Pensions, Profits and Poverty

ON SATURDAY, 19 June, thousands of angry workers and pensioners will join a TUC-organised demonstration. They are protesting at how their hopes for a decent life after retirement are being ruined by the Labour government's failure to increase state pensions and by private companies' attacks on final salary pension schemes.

What do the bosses offer us when we retire? The state pension is only a pittance, so they recommend that a 30 year-old saves over £200 a month into personal pensions schemes whose funds depend on how the stock market is behaving.

What kind of guarantee is that of a retirement free from poverty? None.

The widespread replacement of final salary pension schemes by inferior fixed contribution schemes has angered employees. Last year's Trades Union Congress decided, on the initiative of the PCS civil service workers' union (in particular Socialist Party members), to organise this weekend's demonstration.

The trade unions should not leave their campaigning at a one-off demonstration.

We need action to defend all those pensioners, present and future, who are being ripped off by a system based on private profit.

"Socialism for the rich"?

SIR CHRISTOPHER Gent used to be chief executive of Vodafone. He retired in December on an annual pension of £702,000 with a £100,000 Bentley car thrown in by his ex-bosses. Most pensioners, of course, get nowhere near the same benefits!

Radical US writer Gore Vidal once said of America that "we have free enterprise for the poor and socialism for the rich." And it's not just the USA now as Gent is showing.

Join us if you want to provide socialism for ordinary workers and provide a decent life for people when they retire.

Created By Thatcher, Deepened By Blair

THE PENSIONS industry today reminds me of the scam junk mails that come through my letterbox. Post the senders some money or more likely take out a direct debit and, they claim, they'll "invest" this money in a foreign lottery.

Peter Redfarn

They promise they won't deduct anything from your winnings, and they often offer you some free numbers. Of course, there's no way of checking what's happened to your money.

When the stock markets were high, company pension funds showed an actuarial surplus, ie they were worth more than the amount they'd expect to pay out, so the companies took what they called a "holiday" from contributions.

When share prices plummeted - the FTSE index nearly halved between 2000 and 2003 - pension funds found themselves in deficit. So companies closed their pension schemes, which were defined benefits schemes based on final earnings. At least one-third of large companies, employing over eight million in total, were affected.

Providing a decent pension, however, conflicts with the government's support for "flexible" labour markets. What was the government's response? Companies employing over five people have a choice. They can pay for a company pension at 3% of basic pay, excluding overtime and bonus, or provide access to a "stakeholder" pension, to which they needn't pay anything.

Employers' contributions in the pre-Thatcher era were usually in the 6%-10% range. In either case, there are no guaranteed benefits. The 1995 Pensions Act abolished the Guaranteed Minimum Pension provision, which ensured that members of company pension schemes did not lose from being contracted out of SERPS, the state-graduated pension.

It also introduced funding regulations: basically this meant that pension schemes in deficit had five years to make up the difference, while if they were in surplus, the employer was prevented from contributing at all.

The funding requirements did not apply to money purchase schemes, only to final salary schemes. The current pensions crisis is a result of Tory legislation, by both Tory and new "Labour" governments, coupled with the instability of capitalism.

Even the government 'lifeline' for poor pensioners, Pension Credit, which provided a minimum income level of £102.10 for single persons, or £155.80 for couples isn't enough to live on. It's just the old means-tested National Assistance with a new title.

I'm retiring this year. My pension forecast from the Department of Work and Pensions says I'll get state pensions added together at £92 a week. A company pension from a previous employer pays me £151 a month while the pension from my present employers will be somewhat higher than this. It's not a lot to pay ever-growing bills.

The fat cats make sure they've plenty to retire on. Going back to pre-Thatcher pension law would help pensioners, but only an end to capitalism itself can give pensioners the standard of living they deserve.

Women workers: Penalised For Low Pay

AFTER FACING a lifetime of low pay and unpaid breaks from employment, women also face a retirement in poverty. Despite over 30 years of Equal Pay legislation, women still earn only 81% of the average male salary.

Katrine Williams

Women are penalised for being the people who, in the main, take time out of work to bring up young children and care for other family members. Also when returning to work part-time, women are often below the lower earnings limit (LEL) and do not pay National Insurance (NI) contributions - even if you are working 18 hours on the minimum wage then you are still below the LEL.

Sometimes working patterns can mean workers are paying out NI based on the wages earned over a week or month. But if you don't work the whole year, then yearly earnings may not be enough to count this as a qualifying year for the state pension. Only a third of women belong to occupational pension schemes.

The state pension is nowhere near enough to live on. But as the whole scheme is based on the notion of a male breadwinner in the household, less than 12% of women receive the full basic state pension in their own right compared to 91% of men.

Women make up the majority of pensioners and also the majority of those who have to rely on means tested support. However, government statistics estimate that a quarter of those entitled will not claim Pension Credit.

Yet, instead of putting resources into providing a living pension for all, New Labour is attacking the public sector and has announced 40,000 job cuts in the Department for Work and Pensions over the next few years.

The Socialist Party is fighting to improve living standards for all working-class people. There is no shortage of wealth in society but at the moment it is concentrated in the hands of a few.

Billions have been given to big business and the rich in tax cuts over the past 25 years and billions are being spent to wage war.

Capitalism cannot secure everyone a decent life and income so we need to take the resources out of their hands and change society. By taking the top 150 big companies and financial institutions into public ownership, we could plan and run society democratically and redistribute wealth to meet the needs of all in a socialist society.

What we stand for

Restore the link between state pension and average earnings.
Trade unions to take action to implement their current minimum wage demands as a step towards a living minimum wage of £8 an hour or £320 a week with no exemptions.
Minimum income linked to minimum wage for carers, pensioners and all those unable to work.
Properly resourced and staffed state pension system accessible to all.
Oppose the raising of public-sector retirement age and state retirement age to 65 - for the right to retire at 55.

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In The Socialist 19 June 2004:

European and local elections 2004: Blair Takes A Battering