The Socialist 21 July 2009 |
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COMPUTER GIANT IBM is the latest company to end its final salary pension scheme for its 5,000 members, having already closed it to new members. IBM follows recent similar closures by Morrisons, Barclays and BP.
25,000 Unite members in Barclays are balloting for strike action over the bank's plan to axe its pension scheme.
Ending such schemes saves companies around 20% of payroll costs.
A PricewaterhouseCoopers survey last month found that 72% of companies were considering ending their final salary schemes. This closure trend means that, along with an inadequate state pension, younger workers face having to work longer to try to avoid an impoverished retirement.
IN THE 1990s with the stock market booming, many companies stopped paying in contributions to occupational pension schemes. According to the Inland Revenue, employers saved almost £18 billion during this period, even though workers continued to make contributions.
Companies also looted pension fund surpluses to boost profits. Unilever, for example, stripped out £1.2 billion. Some £726 million of this was handed over to shareholders as dividend payments.
Companies' 'pensions holidays' meant that when stock markets plunged, a huge 'black hole' was left in pension funds. At the start of 2009, 7,800 pension schemes had a total £100 billion black hole.
THE STATE pension age is 65 for men and 60 for women. The state pension age for women will increase gradually from 2010, so that by 2020 it will be 65. The state pension age for both men and women is to increase from 65 to 68 between 2024 and 2046.
The current full pension is only £95.25 a week. A married woman's pension is a paltry £57.05.
2.5 million pensioners live below the poverty line, ie have a household income of less than £226 a week.
An MP with 20 years' service can expect to receive around £30,000 a year in today's prices after they retire.