Your wage or salary is the sum of money necessary to reproduce your ability to work.
Your pension is nothing else than wages or salaries deferred until you retire. Concerns over the effect of increasing life expectancy – sometimes described as a "burden" – are only smoke screens. We need to be clear – lowering pension levels and raising the retirement age are in effect real pay cuts.
Pensions are a transfer payment from the profits of the capitalist class – which ultimately come from what workers as a whole produce. That there is at present a "problem" once more proves that the market economy is incapable of going beyond the limits of the wages system. It cannot adequately provide for the needs of the class that produces and distributes all the wealth in the first place.
Advances gained from the increased productivity of our labour – including an increased life span – are being clawed back by capital to its advantage, pushing the burden from the capitalists onto the workers.
The capitalist class encourages us to see their interests and problems as ours. As a result we find our lives opened up to the chaos and uncontrollable insanity of the market. The market system cannot provide any security for us in the long run, which is why we need to turn the current struggle over wages, salaries, and pensions into a politically organised movement for a society based upon the direct satisfaction of human needs.
It is encouraging to see the fight back. The gains made by wage and salary workers on pay, pensions and other related issues have not, after all, been granted by benevolent governments or employers – they had to be fought for. If those gains are to be defended, democratic and unified action by workers is necessary. If governments and employers win on pensions and wages they will try it again with something else.
Nevertheless, important as activity of this sort is today it still does not get to the crux of the question.
The Socialist Party urges all workers to consider their position. Workers have to strike because they are slaves to the capitalist class who buy our lives by the week or by the month. So, besides making the greatest possible use of trade unions, we ask for recognition that even at their best such action cannot bring permanent security or end
poverty. No strike can stop a government determined to have its way. In the end the logic of capitalism will always win out.
While trade union activity, including strike action, is necessary as long as capitalism lasts it can't work miracles. There can be no lasting solution to the problems the market economy creates within the market system itself. Austerity and insecurity, in a world of potential plenty, is always the lot of the working class. In addition to trade
union action socialist political action is needed on the basis of a clear understanding and awareness of our class interests.
Unions cannot make revolutions – only the working class themselves can do that, through clear, democratic, determined political action.
Our interests are opposed at every point to those of the capitalist class. Our cause can only be the cause of revolution for the abolishing of classes based on a real understanding of our position as workers. Without that understanding, militancy can mean little.
The Socialist Party does not ask for blind support. We do not put ourselves forward as potential leaders. What we seek is understanding. Over the past century we have seen movements rise and fall, we have heard slogans fade into distant echoes, we have encountered scores of "solutions" loudly acclaimed only to be discarded.
The single, simple fact we urge working people to recognise is that capitalism generates problems it is incapable of solving. Workers are so busy taking care of the business of capitalists, we don't have the time and the resources to take care of ourselves. The remedy – the only remedy – is to consciously end the property system that divides and oppresses us.
Showing posts with label pensions. Show all posts
Showing posts with label pensions. Show all posts
Wednesday, November 30, 2011
Wednesday, October 12, 2011
Stealing your pension
A former Boots finance chief has accused the firm of risking the future returns of its 20,000 pensioners by trying to change the way their plans are paid. Alliance Boots has written to members of its retirement scheme offering a "pension increase exchange". Under the proposal pensioners can choose to give up future inflation-linked increases on pensions earned before 1997 in exchange for a one-off boost to pensions.
But the independent pension consultant John Ralfe, the former head of corporate finance at Boots, said yesterday: "The exchange is not neutral for pensioners – the company is giving only 60 per cent of the value of expected increases and keeping 40 per cent for itself. Even those pensioners who live to the average age will be worse off and those living longer than average will be much worse off." He said the firm's pensioners were being asked to make an extremely difficult decision and claimed Alliance Boots "leaves itself open to misselling claims from pensioners and elderly widows who find themselves living too long".
Tuesday, June 28, 2011
state sector pensions
Public sector workers are facing changes to their pensions which, for most, will mean paying more in contributions and working longer. The annual cost of servicing the state sector schemes, as a share of GDP on reasonable assumptions about rising life expectancy and future growth in earnings and contributions, that is projected to rise from 1.7% of GDP today to 1.9% in 2018-19, before falling back to 1.7% by 2059-60. Local government pension scheme presently costs every household around 5p in every £1 paid in council tax.
Some experts say best advice might be to expand the public-sector workforce and massively increase their pay. In five years' time, public-sector pensions probably wouldn't "cost" the government anything at all. In fact, the Treasury might even be making a profit. This is what happened in the NHS over the past decade - pay and employment shot up. The result was that the "cost" of their pension scheme disappeared. In 2008-9 the NHS pension scheme ran a big surplus: it paid in £2.1bn more to the Treasury than it paid out. Over the next five years, the NHS pension scheme will actually provide a surplus to the Treasury of over £10 billion
Already changes have been made. First, the age at which a scheme member could draw a full pension was increased from 60 to 65 years for new members. Second, employee contributions were increased by 0.4% of pay for teachers and by up to 2.5% of pay for NHS staff. Third, a new cost-sharing and capping mechanism was introduced to transfer, from employers to employees, extra costs that arise if pensioners live longer than previously expected. The Commons Public Accounts Committee on the basis of evidence from HM Treasury and the Department of Health is concerned the Treasury did not test the potential impact of changes in some of the key assumptions underpinning the long-term cost projections. Indexing pensions to the Consumer Prices Index rather than the Retail Prices Index is expected to reduce costs further. The committee also heard concerns that the discount rate used to set pension contribution levels was too high. A lower discount rate leads to higher contributions from employees and employers, reducing the long-term cost of pension schemes.
In the 1990s, Britons had more saved in private pensions than the rest of Europe combined, mostly in company schemes. There was so much cash around that firms were taking pension “holidays” because their schemes were in surplus. But Gordon Brown couldn’t keep his hands off this money pot, and from 1997 he syphoned off £5bn a year by abolishing dividend tax reliefs. Then, in the noughties, a collision of factors trashed private sector pensions: interest rates fell, the stock market collapses ( the FTSE is still 25% down on ten years ago.) and inflation returned. The current policy of near zero interest rates has been devastating to all savers. Inflation erodes the value of any savings, whether in a private pension or a building society account by around 5% a year. There used to be many more final salary pensions in the private sector - indeed, public sector pensions were originally modelled on the best practice of great British companies of old, like BP, ICI, GEC. These firms used final salary pensions to attract and hold on to experienced staff. But with globalisation, the collapse of stock markets, and the neurotic search for ‘shareholder value’, corporate Britain came under increasing pressure through the 80’s and 90’s. The old career structures were broken up and pensions scrapped in favour of “money purchase schemes” in which employees are left to the vagaries of the stock market.
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/06/some_of_the_truth_about_public.html
http://www.hrmagazine.co.uk/hro/news/1019523/hm-treasury-shouldn-t-jeopardise-sustainable-public-service-pensions-commons-committee
http://www.unison.org.uk/asppresspack/pressrelease_view.asp?id=2312
http://iainmacwhirter2.blogspot.com/2010/07/pension-apartheid-just-how-bad-are.html
Some experts say best advice might be to expand the public-sector workforce and massively increase their pay. In five years' time, public-sector pensions probably wouldn't "cost" the government anything at all. In fact, the Treasury might even be making a profit. This is what happened in the NHS over the past decade - pay and employment shot up. The result was that the "cost" of their pension scheme disappeared. In 2008-9 the NHS pension scheme ran a big surplus: it paid in £2.1bn more to the Treasury than it paid out. Over the next five years, the NHS pension scheme will actually provide a surplus to the Treasury of over £10 billion
Already changes have been made. First, the age at which a scheme member could draw a full pension was increased from 60 to 65 years for new members. Second, employee contributions were increased by 0.4% of pay for teachers and by up to 2.5% of pay for NHS staff. Third, a new cost-sharing and capping mechanism was introduced to transfer, from employers to employees, extra costs that arise if pensioners live longer than previously expected. The Commons Public Accounts Committee on the basis of evidence from HM Treasury and the Department of Health is concerned the Treasury did not test the potential impact of changes in some of the key assumptions underpinning the long-term cost projections. Indexing pensions to the Consumer Prices Index rather than the Retail Prices Index is expected to reduce costs further. The committee also heard concerns that the discount rate used to set pension contribution levels was too high. A lower discount rate leads to higher contributions from employees and employers, reducing the long-term cost of pension schemes.
In the 1990s, Britons had more saved in private pensions than the rest of Europe combined, mostly in company schemes. There was so much cash around that firms were taking pension “holidays” because their schemes were in surplus. But Gordon Brown couldn’t keep his hands off this money pot, and from 1997 he syphoned off £5bn a year by abolishing dividend tax reliefs. Then, in the noughties, a collision of factors trashed private sector pensions: interest rates fell, the stock market collapses ( the FTSE is still 25% down on ten years ago.) and inflation returned. The current policy of near zero interest rates has been devastating to all savers. Inflation erodes the value of any savings, whether in a private pension or a building society account by around 5% a year. There used to be many more final salary pensions in the private sector - indeed, public sector pensions were originally modelled on the best practice of great British companies of old, like BP, ICI, GEC. These firms used final salary pensions to attract and hold on to experienced staff. But with globalisation, the collapse of stock markets, and the neurotic search for ‘shareholder value’, corporate Britain came under increasing pressure through the 80’s and 90’s. The old career structures were broken up and pensions scrapped in favour of “money purchase schemes” in which employees are left to the vagaries of the stock market.
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/06/some_of_the_truth_about_public.html
http://www.hrmagazine.co.uk/hro/news/1019523/hm-treasury-shouldn-t-jeopardise-sustainable-public-service-pensions-commons-committee
http://www.unison.org.uk/asppresspack/pressrelease_view.asp?id=2312
http://iainmacwhirter2.blogspot.com/2010/07/pension-apartheid-just-how-bad-are.html
Some NEST-egg!!
Millions of pensioners are having their weekly income wiped out by basic bills, without a single penny to spare, research revealed yesterday. A typical couple receives a weekly income of £207.15 - but will spend £207.24 on food, fuel, housing and transport, it said. This is before they have spent any money on the long list of other costs, such as a new pair of shoes, a holiday or a present for a grandchild.
Half of workers do not know they could soon be automatically enrolled into a Government-run pension scheme if they are not in a works pension already. From October next year, employers who do not already offer a company pension to staff will have to offer the Government's new savings scheme, known as Nest (National Employment Savings Trust). Unless workers ask to opt out, and provided they are over the age of 22 and earning at least £7,475, they will have money deducted from their salary each month to go into Nest. It means that from next year, someone earning £22,000 a year, and eligible to save via Nest, will see £56 deducted from their monthly pay. Nest is clearly going to take a few people by surprise,' says Ian Martin, director at HSBC.
What also will come as more of a shock is that around 40 per cent of bosses will cut or freeze their workers’ salaries when new pension rules are introduced next year, a report warns today. The rules will force every boss in Britain to pay into a company pension for each of their workers for the first time in history. They will be required to pay the equivalent of at least 3 per cent of a workers’ salary into a pension. But the report, from the Institute of Directors warns employees’ salaries could be ‘hit’ as bosses resort to desperate measures to try to recover the money lost on the extra pensions bill. When asked how they will find the money, 33 per cent said they plan to ‘freeze’ salaries and 9 per cent said they will ‘decrease salaries.’
And for those already in a works' pension, the UK's 6,533 defined benefit pensions, including final salary schemes, had a collective surplus of just £2.3 billion at the end of April, down from one of £45.5 billion in March. New accounting rule slashed £43billion off pension funds - because of worries that we are living too long. If the accounting assumptions had not been changed, pension funds would have ended the month £37.2 billion in the black. The accounting shake-up came despite the fact that the total value of schemes' assets rose by 1.5 per cent to £1.003 trillion during the month on the back of stock market gains. The overall rise in life expectancy is being driven by fewer people taking up smoking, and healthier lifestyles in general.
http://www.thisismoney.co.uk/money/pensions/article-1724831/Are-forced-pension.html
Half of workers do not know they could soon be automatically enrolled into a Government-run pension scheme if they are not in a works pension already. From October next year, employers who do not already offer a company pension to staff will have to offer the Government's new savings scheme, known as Nest (National Employment Savings Trust). Unless workers ask to opt out, and provided they are over the age of 22 and earning at least £7,475, they will have money deducted from their salary each month to go into Nest. It means that from next year, someone earning £22,000 a year, and eligible to save via Nest, will see £56 deducted from their monthly pay. Nest is clearly going to take a few people by surprise,' says Ian Martin, director at HSBC.
What also will come as more of a shock is that around 40 per cent of bosses will cut or freeze their workers’ salaries when new pension rules are introduced next year, a report warns today. The rules will force every boss in Britain to pay into a company pension for each of their workers for the first time in history. They will be required to pay the equivalent of at least 3 per cent of a workers’ salary into a pension. But the report, from the Institute of Directors warns employees’ salaries could be ‘hit’ as bosses resort to desperate measures to try to recover the money lost on the extra pensions bill. When asked how they will find the money, 33 per cent said they plan to ‘freeze’ salaries and 9 per cent said they will ‘decrease salaries.’
And for those already in a works' pension, the UK's 6,533 defined benefit pensions, including final salary schemes, had a collective surplus of just £2.3 billion at the end of April, down from one of £45.5 billion in March. New accounting rule slashed £43billion off pension funds - because of worries that we are living too long. If the accounting assumptions had not been changed, pension funds would have ended the month £37.2 billion in the black. The accounting shake-up came despite the fact that the total value of schemes' assets rose by 1.5 per cent to £1.003 trillion during the month on the back of stock market gains. The overall rise in life expectancy is being driven by fewer people taking up smoking, and healthier lifestyles in general.
http://www.thisismoney.co.uk/money/pensions/article-1724831/Are-forced-pension.html
Monday, June 20, 2011
MPs Pensions Gravy Train
Both Conservative and Liberal Democrat MPs had, before the General Election, emphasised their belief that MPs pensions were too generous and should be reformed. What has actually happened since the election? They raised the retirement age for women and men to 66. As a result 4.5 million will have to wait longer than expected before they can pick up their state pension. Some women will receive their state pension almost two years later than they had expected.
What about the reforms to their own MP pensions? They continue to reward them with up to one fortieth of their final salary for every year’s service if they contribute 11.9 per cent of their salary. This reduces to one fiftieth if they pay in 7.9 per cent and one sixtieth if they pay in 5.9 per cent. An MP could work for just 15 years and build up a £24,000 pension, based on his salary of £65,738. A worker in the private sector would have to build up a pension pot of £700,000 over a lifetime to get the same income at age 65. MPs’ spouses also receive generous benefits when their husband or wife dies – including a lump-sum worth four times their annual salary and an income of five eights of their pension. In 2008 the state contribute three times more to MPs pensions than its members did themselves.
MPs are still discussing recommendations made by the Senior Salaries Review Board last summer. This recommended moving from a final salary pension to a less generous one based on career average, and increasing MPs’ pension age from 65 to 68. It also said their pension should be built up more slowly. By dilly-dallying over reforming their own pensions while taking swift and punitive measure over everyone else’s (including replacing the RPI link with CPI) MPs have revealed once again that whatever their political colours their prime cause is feathering their own nest. The hypocrisy of our MPs would appear to know no bounds.
Consider Cabinet Office minister, Francis Maude, who criticised the teachers. Maude has claimed £35,000 in mortgage interest payments on a London flat complete with 24-hour concierge and gym . This is close to a house he already owned. He also boasts a house in the country and one in France. His personal net wealth is estimated at £3m. Despite this, during a discussion on Newsnight on 22 October 2010 he argued that a 5% cut to his £65,738 salary was equal to the 'pain' suffered by Britain's poor. He worked in banking as Managing Director at Morgan Stanley from 1993 to 1997. He was also appointed a non-executive director of ASDA Group Plc in July 1992, and served as a director of Salomon Brothers from 1992 to 1993.
http://www.ftadviser.com/FinancialAdviser/Pensions/Comment/article/20110505/67835c0c-71ae-11e0-b94c-00144f2af8e8/Feathering-the-nest.jsp
http://www.guardian.co.uk/commentisfree/2011/jun/17/francis-maude-rhodium-plated-pensions
What about the reforms to their own MP pensions? They continue to reward them with up to one fortieth of their final salary for every year’s service if they contribute 11.9 per cent of their salary. This reduces to one fiftieth if they pay in 7.9 per cent and one sixtieth if they pay in 5.9 per cent. An MP could work for just 15 years and build up a £24,000 pension, based on his salary of £65,738. A worker in the private sector would have to build up a pension pot of £700,000 over a lifetime to get the same income at age 65. MPs’ spouses also receive generous benefits when their husband or wife dies – including a lump-sum worth four times their annual salary and an income of five eights of their pension. In 2008 the state contribute three times more to MPs pensions than its members did themselves.
MPs are still discussing recommendations made by the Senior Salaries Review Board last summer. This recommended moving from a final salary pension to a less generous one based on career average, and increasing MPs’ pension age from 65 to 68. It also said their pension should be built up more slowly. By dilly-dallying over reforming their own pensions while taking swift and punitive measure over everyone else’s (including replacing the RPI link with CPI) MPs have revealed once again that whatever their political colours their prime cause is feathering their own nest. The hypocrisy of our MPs would appear to know no bounds.
Consider Cabinet Office minister, Francis Maude, who criticised the teachers. Maude has claimed £35,000 in mortgage interest payments on a London flat complete with 24-hour concierge and gym . This is close to a house he already owned. He also boasts a house in the country and one in France. His personal net wealth is estimated at £3m. Despite this, during a discussion on Newsnight on 22 October 2010 he argued that a 5% cut to his £65,738 salary was equal to the 'pain' suffered by Britain's poor. He worked in banking as Managing Director at Morgan Stanley from 1993 to 1997. He was also appointed a non-executive director of ASDA Group Plc in July 1992, and served as a director of Salomon Brothers from 1992 to 1993.
http://www.ftadviser.com/FinancialAdviser/Pensions/Comment/article/20110505/67835c0c-71ae-11e0-b94c-00144f2af8e8/Feathering-the-nest.jsp
http://www.guardian.co.uk/commentisfree/2011/jun/17/francis-maude-rhodium-plated-pensions
Monday, June 13, 2011
Protecting pay
Pensions are deferred compensation - money that employees would have been paid as cash salary but choose, instead, to have placed in the state operated pension fund where the money can be professionally invested (at a lower cost of management) for the future. If it is true that pension money is money that already belongs to the public-sector workers, you might ask why state employees would not just take the cash as direct compensation and do their own investing for their retirement through their own individual retirement plans. Expecting individuals to be experts at investing their retirement money in defined contribution plans — instead of pooling the money so professional investors can manage the money as is done in defined benefit plans — is not sound economics. The concept, at its most basic, is buying wholesale instead of retail. Wholesale is cheaper for the buyers.
With pension rule changes, expecting public service workers to make a larger contribution to their pension and benefits programs. What they are actually asking is that the employees take a pay cut. Unions agreeing to these deals on their benefits are accepting the obligation their members paying for them out of their own pockets.
Some commenters have made the point that, while it is true that it is state-employees’ own money that funds the pension plan, when the pension plan comes up short it is up to the employer to make up the difference. There is some truth in this – but not as much as many seem to think.
Because the pension plan is a defined benefit plan – requiring the state to pay the agreed benefit for however long the employee may live in retirement- if the employee lives longer than the actuarial plan anticipated, the taxpayer is on the hook for the pay-outs during the longer life. But is this the fault of the employees? The pension agreements are the result of collective bargaining. That means that the state has had every opportunity to properly calculate the anticipated lifespan and then add on some margin for error.
Nor can the losses taken by the pension funds over the past few years be blamed on the employees. We had employers failing to make annual payments (taking pension holidays) for their pension systems. Lower investment returns from the recession. Increased taxation by the government on funds.
See also here http://www.worldsocialism.org/spgb/aug02/pensions3.html
With pension rule changes, expecting public service workers to make a larger contribution to their pension and benefits programs. What they are actually asking is that the employees take a pay cut. Unions agreeing to these deals on their benefits are accepting the obligation their members paying for them out of their own pockets.
Some commenters have made the point that, while it is true that it is state-employees’ own money that funds the pension plan, when the pension plan comes up short it is up to the employer to make up the difference. There is some truth in this – but not as much as many seem to think.
Because the pension plan is a defined benefit plan – requiring the state to pay the agreed benefit for however long the employee may live in retirement- if the employee lives longer than the actuarial plan anticipated, the taxpayer is on the hook for the pay-outs during the longer life. But is this the fault of the employees? The pension agreements are the result of collective bargaining. That means that the state has had every opportunity to properly calculate the anticipated lifespan and then add on some margin for error.
Nor can the losses taken by the pension funds over the past few years be blamed on the employees. We had employers failing to make annual payments (taking pension holidays) for their pension systems. Lower investment returns from the recession. Increased taxation by the government on funds.
See also here http://www.worldsocialism.org/spgb/aug02/pensions3.html
Saturday, March 28, 2009
Cuba Libre ?
Faced with an aging population and a life expectancy of 77.3 years Cuba's government has raised the retirement threshold by five years, to 60 for women and 65 for men . About 90 percent of Cubans have government jobs, and now both sexes must work at least 30 years, not 25, to get a full pension. When fully phased in by 2015 it means Cuba's retirement age will exceed Latin America's average of 59 for women and 62 for men .
The government says 3 million people attended town-hall meetings to discuss the potential retirement age increase last year, with 99.1 percent supporting it.
As Cuba's work force shrinks, the ratio of workers to retirees has narrowed from seven-to-one in 1970 to three-to-one today. Had the country not raised its retirement age, the ratio would have been two-to-one by 2025, the government said.
Now just where in this decadent capitalist world of ours have we heard the exact same arguments being made and almost the exact same solutions being implemented , i wonder ?
The government says 3 million people attended town-hall meetings to discuss the potential retirement age increase last year, with 99.1 percent supporting it.
As Cuba's work force shrinks, the ratio of workers to retirees has narrowed from seven-to-one in 1970 to three-to-one today. Had the country not raised its retirement age, the ratio would have been two-to-one by 2025, the government said.
Now just where in this decadent capitalist world of ours have we heard the exact same arguments being made and almost the exact same solutions being implemented , i wonder ?
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