‘THIS COULD lead to the biggest pensions rip-off in history.’ That was the reaction last week of GMB union leader John Edmonds to the report on pensions prepared for the government by Alan Pickering. It says workers will face either a cut in pension income or benefits or both unless they pour even more of their wages into company schemes. Pickering says this move is justified because such benefits are ‘bells and whistles’.
The report is the latest hammer blow against any decent life for workers when they stop working. The basic state pension is at the poverty level of £75.50 a week, and company schemes are in crisis. Millions of workers who thought they had a secure future have been told that their pensions will be in the hands of private firms.
Their future will depend on stockmarket gambles paying off. The government has not yet agreed to implement the Pickering report. But Andrew Smith, the pensions secretary, ominously said that Pickering had produced a ‘radical, ambitious and pragmatic report that presented some tough choices’.
Roger Lyons, co-leader of the Amicus union, said the report was ‘a cop-out that shifts the costs of the crisis from the perpetrators to the victims’.
Rodney Bickerstaffe, former leader of the Unison union and now the president of the National Pensioners Convention, said: ‘It will sentence future generations of pensioners to a retirement on means tested benefits and charitable handouts.’
In contrast the main employers’ body, the CBI, said the report could help cut pension costs. It encouraged the government to ‘grasp the nettle’ without being ‘seduced by simplistic arguments that blame employers for current difficulties’.
The Trades Union Congress tried to face both ways. It criticised key aspects of Pickering’s report, but at the same time said it was ‘important, well argued and mostly welcome’! Whether it implements Pickering in full or not, the government is clear that it wants workers to pay out more and more for their own pension. This is on top of the national insurance and tax they already pay.
New Labour is running down the state system and forcing people to go to the private sector. Unions should fight every cut in occupational schemes. But the real solution is a proper state system funded by taxing rich individuals and companies, and by raising national insurance payments for firms.
In almost every European country except Britain there have been big strikes and protests over pension ‘reform’ in recent years. These have been successful in winning concessions or entirely defeating attacks on pensions.
In Britain workers at the Caparo Group were due to hold a strike in defence of their final salary scheme this week. The action was postponed while independent auditors examined the scheme. We need the sort of struggles here that we have seen in Europe.
THE government knew exactly what sort of report it was likely to get when it appointed Alan Pickering to head the review. It was going to get a fat cats’ charter by a fat cat.
He was previously the chairman of the National Association of Pension Funds, the main organisation which most large companies’ pension funds belong to. In this position he campaigned to scrap key rules imposed on private pension funds after the Maxwell scandal.
He has called for the retirement age to be raised to 70 for both women and men. He was formerly a partner at Watson Wyatt, one of the ‘big four’ actuarial firms that work for big companies. Pickering’s own pension is secure. He has a final salary scheme.
FIRMS WHICH have already closed their final salary pension schemes for new workers include:
Abbey National, Alliance & Leicester, AstraZeneca, Barclays, Boots, BG Group, British Airways, BT Group, Cable & Wireless, Cadbury Schweppes, Celltech, CGNU, GlaxoSmithKline, GUS, HBOS, Hays, HSBC, ICI, Lattice, Legal & General, Lloyds TSB, Man Group, Marks & Spencer, WM Morrison, Next, Northern Rock, P&O Princess Cruises, Rentokil Initial, Reuters, Royal & Sun Alliance, Sainsbury’s, Schroder and Scottish Power.
Some companies, such as Iceland and the Caparo Group, have gone even further and ended the final salary scheme for existing workers.
BOSSES AT the firms involved have no worries about the future.
Their expected annual pensions are: Dr Jean-Pierre Garnier (GlaxoSmithKline) £833,000, Sir Dominic Cadbury (Cadbury Schweppes) £386,000, Hakan Mogren (Astra Zeneca) £447,876, Bob Scott (CGNU) £419,000, Lord Blyth (Boots) £392,000, Sir Iain Vallance (BT) £344,177, Peter Ratcliffe (P&O Princess Cruises) £300,000, John Gildersleeve (Tesco) £309,000.
The Financial Services Authority, the City regulator, warns that someone who retires in their sixties might live for another 30 years. If their income is not protected against inflation of 2.5 percent a year (a very low figure historically) then it would fall by over half by the end of their life.
The Pickering report says workers should be forced to put a significant part of their wages into the company scheme. This would hit around half of employees, some 11 million people.
MORE THAN half of Britain’s biggest 100 companies, including Marks & Spencer, BT and Lloyds TSB have closed their ‘final salary’ schemes to new workers. They have told these workers they will have to rely on pensions that depend on the performance of shares on the stockmarket. Final salary schemes offer a guaranteed pension based on what your wages are at the time you finish working. The alternative is a share-based scheme where workers have to pay in just as much as before but the firm has to pay in much less.
It is a form of pay cut because pensions are deferred pay. Malcolm is a worker at Iceland. He told Socialist Worker, ‘I have paid into a pension for 15 years in the hope that I would have a reasonable retirement. I don’t earn enough to look forward to riches, but I thought I’d get around £7,000 a year. Now, when the final salary scheme goes, I could be on £4,000 a year or even less. Where’s that money going? It will help the management and the share price. It’s legal robbery and the union should be making it a big issue. There should be strikes over this theft.’
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