‘WORK UNTIL you are 70 or older if you can’t afford to retire.’ That’s New Labour’s grim message in its recent Green (consultative) Paper on pensions.
Jon Dale
It seems we’re living too long. A 65-year old in 2002 could expect to live four years more than a 65-year old in 1960. Government and employers say they can’t afford state and occupational pensions to pay for this.
Pension experts estimate a 30 year-old needs to save over £200 per month. 13 million workers are not saving enough, according to the Department of Work and Pensions (hardly a surprise!).
Taking out a personal pension scheme is no guarantee of security in old age. One of the largest sellers, Equitable Life, has just cut payments to existing pensioners by 20-30%.
So New Labour’s big idea is to keep people at work. Compulsory retirement at 65 will go. Teachers, civil servants and NHS workers, who can now retire at 60, will have to soldier on until 65.
Allowing workers to work past 65 is one thing. Making employers keep them on is another, as they are often on higher pay than new starters.
Older people develop more health problems, work slower and tire more easily. Learning new skills and adapting to change takes longer.
Employers often use early retirement rather than redundancies to cut jobs and wages.
Older workers have valuable experience and may want to keep social contact through work.
But why should anyone have to flog themselves to death continuing at the intensity bosses demand?
A socialist pensions policy would allow workers to start drawing a decent pension at 55. Those who want to continue work could do so. Part-time work with part pension could bridge the gap between work and retirement (one good idea in the Green Paper).
Bosses want workers to be responsible for our own pensions. But the wealth now pocketed by big business has been made by working people.
We should enjoy it during retirement.
Bosses’ pension ‘holidays’
WORKERS IN large companies often belong to occupational pension schemes. They pay about 5% of their wages into the fund while the employer pays 10-12%. Benefits are based on final salary and the years workers have paid in.
During the 1990s Stock Market boom these schemes built a surplus of £19 billion. 94% of this went to employers as a “holiday” – they stopped paying in for a few years.
Now the Stock Market has fallen the bosses want to stay on holiday. One in three large schemes have closed to new members (mostly younger workers). Employers want to cut their payments to an average 6% of wages by shifting workers into ‘defined contribution schemes’. These pay lower benefits. The worker takes all the risk, with no guarantee about the size of pension.
Employers may wind up ‘final salary’ schemes altogether. Shipping giant, Maersk, recently did this. Benefits were cut by up to 60%, despite the scheme being in surplus and the company profitable. The government talks of legislating against this, but it could take four years. How many more Maersks by then?
New Labour is looking at making us save more for retirement. They have appointed the former head of the employers’ organisation, the CBI, to examine this. He’s unlikely to recommend that bosses should pay!
But workers in some industries have already shown their determination to fight this daylight robbery and strike to defend their pension rights.
