Socialist Worker

Pensions robbery looms for millions

Issue No. 1908

THE PENSIONS issue at the centre of the Network Rail dispute is a vital one for millions of workers.

Employers have already seized £4 billion from workers by abolishing “final salary” pension schemes and replacing them with inferior “money purchase” ones.

This is perhaps the most serious attempt by bosses to cut pay and conditions across the entire working class since the Second World War.

Back in 1991 nearly six million workers had final salary schemes.

These pay out a guaranteed pension based on a proportion of earnings at retirement.

Today that number has fallen by almost half.

Two thirds of final salary schemes operated by the top 350 companies have now been closed to new workers.

Money purchase schemes—like endowment mortgages—are based on stockmarket gambling. The pension payout is directly linked to the ups and downs of share prices.

By switching from final salary to money purchase schemes, bosses are offloading their risks onto workers.

If stocks perform badly, it will be the worker who suffers financially, not the employer.

The chart on this page show why this matters so much.

Consider a male manual worker earning £10,000 a year who joins a typical final salary scheme at age 30.

He can look forward to a pension of £84 a week on top of the state pension when he retires.

But in the equivalent money purchase scheme he would receive only £28 a week—a third as much!

There are still over three million workers on final salary schemes.

They can defend their pensions—if they use the tactics which won at Network Rail.

If you enjoy Socialist Worker, please consider giving to our annual appeal to make sure we can maintain and develop our online and print versions of Socialist Worker. Go here for details and to donate.

Article information

Sat 3 Jul 2004, 00:00 BST
Issue No. 1908
Share this article


Mobile users! Don't forget to add Socialist Worker to your home screen.