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Pensions: We Won't Work Till We Drop!
FOLLOWING ITS decision to raise the retirement age for women from 60 to 65, the government is now encouraging workers to go on working until they're 70.
Peter Redfarn, postal worker
At the same time they're reducing statutory redundancy payments for workers over 41 from 1.5 weeks pay for each year of service to one week. Of course, they put forward all this in the name of "non-discrimination" but the real reason is the crisis in the pensions industry (see article right).
True, some people work in old age because they want to - I know an octogenarian with a book-selling business. But most of us work only because we need the money.
Imagine going out on a postal delivery with a pouch holding up to 16 kilograms, for three and a half hours without a break in all weathers. What 69- year-old would want to, or be able to do that? Even Royal Mail Chairman Allen Leighton admits, in a letter trying to sell us a pay deal not agreed by the union, postal workers have had enough.
There are other reasons for retiring earlier. My stepfather, after working decades as a railway lorry driver, retired early to look after my mother, who was in declining health. His company pension was sufficient for him to do that.
Now more and more workers are in the same situation as one old colleague. He was told he was too old to join the pension scheme. He retired at 65, and came back as a casual. But after a few years he still couldn't afford to retire, and got a job at Gatwick Airport.
We don't want to work till we drop. Some of my workmates were under 40 when they died. We want a chance to do things we want to do, while our health permits it.
Many of my workmates look to the mass strikes in France, over this pension issue. Far from working until 70, let's introduce retirement at 50, at least for Tony Blair!
Through the pensions maze
IF YOU have an occupational pension scheme, you contribute part of your pay - your employer may also contribute. The money is invested on the stock exchange, in property, government bonds etc.
The trouble is: if the pension fund's advisers say the fund has enough money to pay out its future pensions, the employer doesn't have to pay in anything at all.
During the stock exchange boom, employers took many such "pensions holidays", while workers kept paying in. When stock exchange prices fell, the accountants declared the pension funds 'in deficit', but employers weren't obliged to make up the shortfall!
There has been a change from one type of pension scheme, final-salary, to another, money purchase, in which you take the stock exchange risk. The fund, what you paid in, plus anything the employer has added, less what fund managers take out as commission, determines how much pension you get. If the stock exchange goes down, so does your pension.
However, the final salary scheme, even with index linking to inflation, isn't ideal. If your pay varies from year to year, whatever rule the fund uses to average pay may not be to your advantage, particularly if your work hours and pay have gone down as you approach pension age.
These pensions are usually "integrated" with the state pension. This means that part of your pay is disregarded and if the lower earnings limit for national insurance goes up, your "pensionable pay" goes down; if you retire before 65, your company pension will go down when you receive the state pension.
The Wilson government introduced a Guaranteed Minimum Pension, where company pensions had to pay at least as much as the graduated state pension SERPS. Thatcher abolished this guarantee, and Blair didn't reinstate it.
The alternative to a company pension is a private pension, but this means shelling out a lot for very little. If you contribute £100 a month for thirty years, you'll get an inflation-proof pension of just £49 a week plus a lump sum of £19,505. [ www.pensioncalculator.org.uk quoted in The Independent 3 July].
In The Socialist 12 July 2003: