Socialist Worker

New pension rules could bring disaster

Issue No. 2031

The new “Britsaver” pension, which the government announced this week, could make matters worse for millions.

Under the new rules all companies must set up a pension scheme for staff from 2012.

Workers will pay in a minimum of 4 percent of their wages (unless they opt out) while their bosses will contribute 3 percent plus tax relief of 1 percent.

Such small amounts will do nothing for low earners except reduce their present wages and make them ineligible for pension top-ups under benefit rules. The government will save, workers will lose out.

And pension experts fear companies will take the opportunity to make their workers’ existing pension schemes less generous.

Philip Hammond, the Tory pensions spokesman, showed how managers were thinking when he said, “There are already a lot of finance directors around the country looking at the cost of their existing pension scheme, and preparing to slash the bill.”

At present, firms that pay into pension schemes contribute an average of 7.6 percent of workers’ pay.

The new scheme will also be administered by private firms, with all the attendant dangers that come with that.


Demand action over new scheme

The government’s latest proposals for the local government pension scheme were due to be unveiled on Friday of this week.

They are almost certain to be “pay more for less”.

If they are, then the Unison union has pledged to call a national strike ballot.

This would most probably be widened to include 11 other local government unions.

As soon as the proposals are released, Unison members should contact the members of the service group executive – which meets on 19 December – to demand action.


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Article information

News
Sat 16 Dec 2006, 00:00 GMT
Issue No. 2031
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