Why is there such a battle over pensions?
Pensions are deferred wages – payments for work that has already been done.
The bosses see pensions as an additional expense that they’d rather not pay.
They pay wages in order to make workers turn up for work. And the ruling class pays for other things that help with the reproduction of labour power – health and education for example.
Pensions are in some ways more vulnerable than expenditure on these because they are much less about the reproduction of labour power. So there is a constant struggle over pensions.
The ideal situation for the boss would be that on the day you finish work you drop dead, so that no further expenditure on you would be necessary.
In what way are the bosses attacking pensions now?
Now that the system is in serious crisis, our rulers are trying various ways to cut expenditure on pensions. The first is to make people work longer – to push up the retirement age.
The second is to reduce the amount of pension that is paid – so the state pension in Britain, compared to average earnings, has fallen very sharply.
There are supplementary struggles about the way that pensions are delivered – they can be about making profit. So there is pressure towards privatising pensions. The state says, “We won’t be able to provide for you so you’ll have to save the money yourself.”
What happens when pensions are privatised?
Private pensions make profits for the companies that run the schemes. But they are worse for workers and wasteful.
It’s estimated that 30 percent of workers’ contributions goes to administration and marketing. But in state schemes, it’s around 1 percent.
Private pensions mean a huge amount of money is gobbled up by the private sector and is taken away from pensions.
Why do our rulers say there is a pensions crisis?
The justification for these attacks is the idea that there is a “demographic timebomb”.
There are a few points to make about this. Firstly, the pressure towards pension reform came from the World Bank in the 1980s. It made the case for reforms firstly in Asia, Latin America and parts of Africa – where the argument about a demographic timebomb was complete nonsense.
Those countries had expanding populations and overwhelming numbers of young people. The changes were about cutting expenditure.
Secondly, more people have been brought into the workforce, for example women workers.
This has increased the potential amount of money that can be created to pay for pensions.
Productivity has also increased – workers produce far, far more than they did a few decades ago. So this idea that there is a fixed pot of wealth for provision for older people is problematic.
The idea of a demographic timebomb is a cover for an ideological attack on state pensions, and a way of getting more profits and cutting welfare expenditure.
Our rulers also thought that workers would care about the health of the system if their pensions were tied to the stock market.
What would the changes the bosses propose mean for pensioners?
If final salary pension schemes, which give a guaranteed pension as a percentage of workers’ final earnings when they retire, are allowed to go it will be very dangerous.
Many employers are trying to replace them with ones based on stock market returns. This is much cheaper for the boss but introduces uncertainty and insecurity for workers.
We would end up with a situation where people get even less out of their pension than they put in. Ordinary people have so little money left over that they can’t save.
The attacks essentially cut workers’ wages in a slightly less overt form than just if you pay them less each week. But by saying we will be paid less in the future they’re doing the same thing.
How could it be different?
In any decent society older people would have a decision about when they leave work, which would depend heavily on the type of work they do.
Today the number of pensioners who work is rising – but because of poverty rather than through real choice.
In most decades since the Second World War, life expectancy has increased and the pension age was either stable or fell. This used to be regarded as social progress. Now the clock is being turned backwards.
There has been some resistance to the attacks, most notably in France, Greece and Germany.
The trouble is that, far too often, the unions accept the argument that bosses can’t afford pensions and so things have to get worse.
We need struggle to prevent any further attacks on our pensions.