Britain: Saving pensions

Millions of public-sector workers are faced with huge cuts to their pensions – some from as early as April 2005.

When Chancellor Gordon Brown announced 104,000 civil service job cuts in his last budget, Socialist Party trade unionists called for a one-day public-sector strike in response to New Labour’s public-sector onslaught. Since then, Socialist Party members in civil service union PCS and other unions have been to the fore in promoting this idea. Now, other union leaders have begun to take up the call, especially concerning the attack on pensions. Over the next month, Socialist Party members in the trade unions will be pushing union leaders to turn their words into deeds before the general election. cwi online.

Saving pensions – united action needed

In response, a number of union leaders – under increasing pressure from their angry members – are threatening strike action in the run-up to a general election. This is if the government scraps final salary pension schemes or other vital aspects of current pension entitlement.

Gordon Brown, desperate to cut as much public spending as possible, wants to reduce the government’s responsibilities as an employer. He wants to follow the road trodden by private employers in effectively cutting workers’ pay by slashing their final pensions and basing pensions on a "career average" salary.

This will mean thousands of pounds a year being robbed from many of the lowest-paid local government workers who are facing retirement in just a few years time. New entrants into teaching, from 2006, will face "career average" salaries. Linked to this is the likely ending of the allowance to retire at 60 on a full pension if they have served so many years.

Now, regardless of how many years they have worked, public-sector workers face having to work to 65 before they can claim a full pension. In effect, they are being made to work five years longer. For some workers, this will mean working until they drop dead.

Pay cut

Finally, the government wants to take more from workers now by compulsorily increasing their level of contributions. This is whilst the government decreases its employer contributions. Again, this is effectively a pay cut.

Many young workers are struggling to pay off student debts and pay the mortgage for their first home. This will have a devastating effect on their finances.

The government is aware of the outcry and has made some cosmetic changes to their plans. Amongst teachers, for example, new staff will face changes from 2006. For existing staff, the changes will only be introduced after 2013. For existing teachers under 50, there are some transitional arrangements proposed but these will also end in 2013.

Similar ’transitional arrangements’ are being proposed in other areas of education, the fire service and for some sections of local government workers. And, at the time of writing, it looks like the government is about to propose similar changes for civil servants.

Trade unions – like the GMB, Amicus and TGWU – are already facing a massive pensions crisis amongst their members in the private sector. Some workers are facing the prospect of no pension at all after their companies have gone bust – taking the pension scheme with it. Many other private company pension schemes are seriously underfunded after the bosses took long-term pension holidays – opting out of paying contributions – in the 1980s and 1990s, and because of the decline in stock market values (see page 15).

For all workers, pensions are in effect deferred wages. Any attempts to change them now amounts to a pay cut.

GMB union leader, Kevin Curran, has already faced an outcry from his members in the private sector. Now he says that thousands of GMB members are phoning the national office demanding action from their union.

Similar pressure is being felt by other union leaders. Dave Prentis, currently leader of UNISON, is facing re-election and hoping to appear radical. He has warned of a strike by public-sector workers before a likely general election in 2005.

Public sector workers looking for a lead will welcome these statements. But they will want to know they are not just words designed to get minimal government concessions.

Public-sector trade union leaders are meeting at the TUC on 13 December to discuss the possibility of co-ordinated action. Mark Serwotka, PCS general secretary, has already clearly called for the unions to argue for a joint negotiating position and for co-ordinated strike action in spring 2005 by education, health, local government and civil service workers.

It’s possible the government may temporarily retreat and defer or lengthen the timescale of introducing changes. They would want to avoid a public-sector general strike in the immediate run-up to the general election.

Although this in itself would be a partial victory, it would only be a temporary stay of execution. Public-sector workers and trade unionists will instinctively understand that the best time to take action and force the government to fully retreat would be before a general election.

Public-sector trade unionists must demand that their leaders don’t let New Labour off the hook and organise one-day strike action before a general election.

There are two groups of public servants who are exempted from the current proposed changes: MPs who recently voted themselves the best pension scheme in Europe and say they can’t afford it for anyone else, and top judges who threatened a withdrawal of labour if their privileged pensions were touched.

For once, workers will want to take an example from the judges and take action to protect their pensions.

A few unions, like the NUT teachers and Fire Brigades Union, already have conference decisions committing the union to industrial action if their pension schemes are changed. The local government section of UNISON has lodged a request to hold a ballot for industrial action over pensions.

A number of local NUT associations have held indicative ballots showing strong support for industrial action to protect their pensions.

After the TUC meeting on 13 December, trade union leaders will be going back to consult their executives and memberships over what to do next. Socialist Party trade unionists will be asking trade union members to call on their leaders to co-ordinate industrial action and force the government back. In particular, branches and union organisations should pass resolutions committing their union to supporting and organising a one-day strike by public-sector unions and workers.

Teachers: an old age in poverty

"Socialist Party candidate Roger Bannister is absolutely right to make the pensions issue central to his campaign to win the leadership of UNISON.

In a survey of NUT members in St. Helens, 89% said that they would like to take industrial action to defend their pensions. Pensions are always being raised as the most important issue at workplace meetings.

The New Labour government plans to raise the retirement age from 60 to 65. Teaching is a job that tears at your nerves. Very few teachers see themselves being able to teach beyond the age of 60.

Those who think these measures will lead to children being taught by teachers in their 60s have missed the point. Compulsory health screening and vicious sickness policies will ensure that most teachers have been forced out of work long before they qualify for their full pension, which means they will spend their old age in poverty. No wonder teachers expect their unions to lead the fight against government pension plans."

Robin Pye, St. Helens

Civil servants: we’ve been robbed!

"When colleagues in my office heard about New Labour’s plans to attack our pensions, several of us stopped work immediately we were so worried. Some staff, even those not in the union and those normally very conservative, were shocked, and very upset.

There is an even greater state of disbelief in the DfES than there was when we heard about the redundancies in April. At the moment our pensions are based on the best pay we get in our last three years. Now, if New Labour get its way, it is going to be based on the average over a career.

What that actually means for me is that if I slave away for years, and finally get a promotion shortly before I retire – a hope all my colleagues share – I will effectively be living in poverty.

My pension will be as much based on the pay I received as a young man joining the civil service in the 1980s, as it will be based on my salary ten years from now.

I feel cheated – I cannot yet afford a mortgage in London but at least with a mortgage the payment period is not suddenly protracted for no reason. I have always seen my pension as deferred pay and it feels to me, and those that work with me, that we have literally been robbed."

Mick Philipsz, Department for Education and Skills (DfES), London

Womens’ pension scandal

The scandal of womens’ pensions has been exposed in a TUC report.

Low pay, part-time work, jobs with no pension scheme and a shorter working life, mean that many women are facing poverty in old age. 43% of women who are working, work part-time. And womens’ full-time hourly pay is only 86% of mens.

Only half of women now getting to retirement age qualify for a full state pension. Now, many young women are saddled with student debts, which mean they can’t save for old age.

The TUC held a conference: "Pay Up for Womens’ Pensions" on 6 December, where TUC general secretary Brendan Barber emphasised how women are penalised for taking time out of work to bring up children.

Private pensions scandal 1

About 40,000 existing and former workers at Turner and Newall are facing losing their pension.

The US owners of the car parts firm, Federal-Mogul have withdrawn their offer to continue funding the pension scheme.

If the scheme is wound up, it would be the biggest closure of its kind and it would mean exiting workers getting less than 40% of what they were expecting.

Talks between Federal-Mogul, which is in bankruptcy protection and the pension fund’s trustees have broken down.

Federal-Mogul was forced into bankruptcy protection because of its liabilities for paying claims from former workers with asbestos-related health problems. Bearing responsibility for the workers they employ is obviously not one of Federal-Mogul’s strong points.

Private pensions scandal 2

Workers at the Carpets International plant in Newbridge, South Wales, are facing the loss of up to 60% of their pensions.

Before the firm went out of business it took a "pensions holiday" for seven years and never resumed payments.

After the company went into voluntary receivership it was subject to a management buyout in November 2003, when it became Abingdon Flooring. Abingdon Flooring operates as a separate company and employs 350 workers at the Newbridge plant.

Some pensioners have had letters informing them they will be getting £1,000 a year, not the £3,500 a year they were expecting.

TGWU branch secretary Lawrence Long expressed the workers’ and pensioners’ anger when he said that companies were: "Allowed to walk away from pension schemes when there are massive deficits."

From The Socialist, paper of the Socialist Party, cwi in England and Wales

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