PENSIONS MINISTER Andrew Smith recently announced a £400 million pensions
compensation package. But this reform was only squeezed out of the Treasury to
save the government’s Pension Bill.
Dave Carr
With threats of trade union strike action and a major TUC-backed demo on 19
June over the issue, 209 Labour MPs threatened to wreck the Bill.
Some trade union leaders will see this compensation as evidence that the
Labour government will listen to the unions. But £400 million for 60,000
workers, spread over 20 years, only provides about £7 a week – less than most
workers paid out their salaries in weekly contributions. And it doesn’t
compensate workers whose schemes ended after their companies went bust before
1997.
A pensions expert ominously issued a warning about public sector pensions
last week. Gordon Pollock, chair of the Association of Consulting Actuaries
said: "I simply do not think it will be sustainable for the only people who
have good pensions to be people working in the public sector."
Final salaries
The final salaries pensions crisis arose after the late 1990s stock market
boom went bust. In the boom years many companies took ‘pensions holidays’ ie
stopped replenishing their pension funds and instead pushed up shareholder
dividends and chief executives’ pay and perks.
The resulting deficit in UK pension funds was staggering. From a surplus of
£80 billion in 2000 the pension funds became a £160 billion deficit by June
2003. And despite reducing that deficit by about £60 billion by the end of
last year (due to stock markets recovering) many companies are still pulling
the plug on final salary schemes.
One in four schemes closed last year alone. The TUC estimates that half
Britain’s biggest companies have closed salary-related pension schemes – the
rate of closures amongst smaller companies is even higher.
Under-funded private and state pensions led governments in France, Italy,
Germany and Austria, into attacking workers’ rights by insisting that they
have to work longer and pay more in contributions, for less of a pension.
The trade unions responded by organising strikes and protests, something
which is now urgent in Britain. That is why Socialist Party members in the PCS
civil service union initiated the call for a national march and rally to start
a trade union campaign on pensions. This was carried at last year’s TUC
congress.
Pay Up for Pensions
March and rally
19 June
Assemble 12 noon, Embankment, London. Rally at 2pm in Trafalgar Square.
There will be a similar event in Edinburgh on the same day
Rail Workers Vote For Action Over Pay And Pensions
MEMBERS OF the rail union RMT, working for Network Rail, have voted to strike over pay, pensions and concessionary travel. 58% voted in favour of action in a 68% turnout.
Before the ballot result was declared, Network Rail had refused to negotiate over their 3% pay offer. The company had also closed its final salary pension scheme, without any negotiations with the union and imposed an inferior scheme on new entrants, which RMT general secretary Bob Crow described as “a glorified savings plan.”
When the ballot result was declared, Bob Crow said: “Our members have made it clear that their pensions are not an optional luxury that can be cut to help boost the bosses’ bonus fund.
“When we warned that even those left in the existing pension scheme would be facing ever-increasing costs to keep their pension benefits, we were called scare-mongers, but our members have seen through their ‘I’m alright Jack’ campaign.”
Now the ballot result has been declared, Network Rail has agreed to talks. As yet no strike dates have been set.
