THE PENSION scandal gets greater by the day. More and more firms are closing off schemes which give workers a pension linked to their earnings, and instead are forcing them to gamble their future on pensions linked to the stockmarket.
A report released this week showed that 60 percent of schemes linked to earnings are now closed to workers joining a firm. Even the most moderate union leaders know that a major assault is going on-although they are doing precious little about it. Amicus-MSF leader Roger Lyons has called what is happening a ‘wage cut’. That’s right-and it is time to fight wage cuts.
The TUC has pointed out this week the danger with what is happening with company schemes. But it has called for workers to be forced to take out their own pensions. Even this was too much for the bosses’ CBI organisation which objected to the TUC’s very mild demand that firms should be made to top up pensions.
It is particularly urgent because the turmoil in the stockmarket this week underlines the immense risk that is going on with millions of people’s pensions. Most company schemes and private pensions invest heavily in shares. The returns they promise for the future depend on an ever rising stockmarket.
Once the market turns down, as it has recently, then the value of the pension falls-or collapses. Firms make huge savings by pushing workers into share-based schemes.
The average employer contribution to salary-based pensions is 11 percent of wages. This falls by half to just 6 percent in share-based schemes. This has meant massive profits for top companies.
NEW LABOUR is telling workers to take out private pensions or face poverty as the state pension withers away. The government wants the current pension provision of 60 percent state and 40 percent private to be reversed. Yet, because shares are no longer soaring, companies like Equitable Life have slashed their private pensions.
This has left hundreds of thousands of people with considerably less income in retirement than they expected. Pensions are supposed to be all about security-and that’s the one thing the private sector cannot guarantee. Successive governments have relied on people having a decent company pension to make up for the fact that, over the last 20 years, the state pension has been allowed to decline.
The turmoil in occupational and private pensions underlines that the way forward is to have a proper state system. It should provide a living pension and be funded by higher tax on the rich and by raising employers’ contributions to the European average. At present British firms pay less than half as much towards pensions as firms in the rest of Europe.
They pay a pittance into the state pension system and then rob workers over company pension plans.
SHETLAND Islands council is threatening to slash up to 500 jobs, a quarter of its workforce, because of losses it made on stockmarket speculation.
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