Socialist Worker

The £30 billion pensions theft

Issue No. 1842

A SERIES of disputes have broken out as employers, including at BAE Systems, Peugeot and the Birmingham Evening Mail, try to make workers pay more for their pensions. Management threaten that unless workers accept pay cuts then pension 'final salary' schemes - which offer improved benefits - will be ditched.

The employers say they have been driven to this by the fall in share prices which has put intense strain on pension funds. They never mention how they have plundered these schemes in the past. The Inland Revenue has just released figures of the flow of money into and out of big pension funds over the last two decades.

They show an awesome scale of robbery by bosses of some £30 billion. Between 1987-8 and 2000-1 2,881 employers took 'holidays' from making contributions to pension schemes. This saved them over £13.2 billion. Over the same period 1,566 employers reduced their contributions, saving £4.75 billion. Some 293 employers took refunds from these schemes, saving another £1.2 billion.

Another £9 billion of pension funds went to 'increases in benefits'. Much of this was redundancy packages to make it easier to sack people. The Financial Times says, 'For a long time pension schemes provided generous benefits to employers.

'Among large schemes, surpluses allowed employers to avoid £29 billion in contributions in the years 1987-8 through 2000-1. Partial contribution holidays aided employers by a further £1.6 billion. These numbers underestimate the benefits earned by employers. Most schemes with surplus did not have to report contributions holidays because they fall below the ceiling where reporting was required.'

Incredibly, despite all their squealing, a fifth of pension schemes are still on employers' pension holiday. Such facts make a mockery of claims by employers that there is no way to fund decent pensions. The trade unions should put forward these demands:

  • No wage cuts.
  • No cuts in pension scheme benefits.
  • For a proper state-run system that gives pension security for all.

    Where necessary, there should be strikes to win these demands.
    Charlie Kimber

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    Article information

    Sat 15 Mar 2003, 00:00 GMT
    Issue No. 1842
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