WeeklyWorker

06.06.2007

Hands off our pensions

Now that the stock market has seen a mild recovery, some larger companies are seeking a 'holiday' from their pension fund contributions. Jim Moody comments

Now that the stock market has seen a mild recovery, some larger companies are seeking a 'holiday' from their pension fund contributions. This comes after several years of pension plan deficits, company moans and government intervention to replace money stolen in previous 'contribution holidays' by grasping employers.

We have also witnessed supine misleadership from those heading the very organisations set up by workers to give them collective strength. Trade unions in the main swallowed whole the dire warnings of companies' inability to pay and mass media-generated panics about pension fund disaster, then caved in when company push came to shove. Unions accepted in the main the government's unwillingness to fully meet funding gaps in its own or in corporate pension schemes, and effectively rolled over to accept on their members' behalf the closure of final salary schemes.

As the pension funding situation stood just four years ago, the contributions gap was a big one: in March 2003 the largest final salary schemes had a combined shortfall in their funds of over £100 billion. But that has now dropped to £4 billion and, for example, nearly half the funds looked at by consultants Aon are now in surplus. Such are the vagaries of the capitalist market, whose oscillations affect the pension funds markedly.

The overall deficit has decreased by approximately £100 billion since 2003 and is about to disappear altogether. According to Aon senior consultant and actuary Marcus Hurd, "The era of the pension scheme accounting surplus has clearly begun."

Thanks to the corporate panic that was so effectively transmitted by the media, the 'problem' of pension fund deficits became normalised, and the mainstream bourgeois response was to find a self-serving way out of it . Sadly, it was a situation that became normalised for the trade union leaderships, too, becoming a real problem for the working class. Aside from huff and puff, no trade union leaders have shown their mettle in a fight on pensions that even kept to the status quo, thanks in the main to being gulled on the pension fund shortfall. Failure to challenge the basis of the pension funding system is but a symptom of a general failure and an inability to challenge the whole capitalist system that the social democratic outlook of these leaders exemplifies.

Now pension experts have already started warning companies that they should be careful about putting too much money into pension funds. Here we see but a device to ensure that the benefits of the rising stock market end up as surplus value in the pockets of investors, not retired workers. Employers have mendaciously seized on the argument that if there is 'too much' in their company's pension funds then they could risk being accused of ripping off shareholders under company law. Brazen to the core, corporate advisers do not, of course, suggest that those who create the surpluses in the first place, the workers, are the ones who should benefit from rising pension funds. On the other hand, when they are in deficit their advice is at best to wheedle money out of government to bolster the sagging fund; at worst it is to let the workers go hang, as we have seen many times in recent years.

Concern with working class pensioners not getting their due has come to the fore again. On June 3, at the start of the union's annual conference, the GMB condemned corporate asset-strippers, who left the bill for workers' pensions to be picked up by the state: "A total of 96 insolvent pension funds in the rescue schemes set up by the government have direct links to private equity owners", and the GMB says it has examined all the publicly available information regarding all of them, 21 of which have unfunded liabilities of £1,994,268,000. However, "Due to the secrecy in which private equity operates, GMB has not been able to establish any figures for the amounts of the unfunded liabilities of each of the other 75 insolvent pension funds." So the total amount of underfunding will be considerably larger, but such commercial secrecy prevents the public knowing how much these plunderers have got away with, courtesy of being bailed out by the state.

Earlier this week, GMB general secretary Paul Kenny commented: "It is clear that private equity racketeers are treating the British public with contempt. It is time that we all stopped being so gullible and faced the facts. Asset-strippers, as private investors hiding under a cloak of secrecy and pretending to be interested in building up the UK economy, are taking the taxpayer for a ride, while destroying jobs and leaving in their wake thousands of workers who saved for their pensions without a pension and dependent on the state."

Despite his seemingly strong language, Kenny was nevertheless content to leave it to the parliamentarians rather than initiate a compelling campaign amongst his members. He went on to suggest only that, "GMB want MPs to use their full powers to uncover the full amount of the unfunded liabilities of all 96 insolvent pensions funds with links to private equity which have been dumped in the taxpayers' lap. The MPs should also examine how private equity companies are allowed to take over companies, asset-strip them, place them in liquidation and then hand the pension fund liabilities to third parties. Gordon Brown must close the loopholes to stop private equity mugging the British taxpayer. He should also bring in a windfall tax on private equity to recover the amount the taxpayer pays to bail out the unfunded liabilities of insolvent pension funds."

Hardly stirring stuff, accompanied by talk of the poor British taxpayer rather than the dire results likely to be experienced by workers, including GMB members, thanks to such legalised robbery. Pensions (deferred wages) are seen as a soft-option source of surplus value to the owners and controllers of capital. Even those pension schemes thought to be set in stone can be raided for the corporate and state bottom line.

In fact GMB is probably the least culpable of all the public sector unions, in that it held out the longest against the idea of accepting a far worse pension scheme for new recruits in exchange for protecting the benefits of current members - a disgraceful, divisive, two-tier system. In 2005, the Socialist Party-dominated Public and Commercial Services Union was amongst those that surrendered the rights of future members in this way. So, whereas current civil servants continued to be able to retire on full pension at the age of 60, new entrants now have to work until 65.

The SP claimed that safeguarding (for the time being) the pensions of current members was a significant victory, since the entire financial establishment insisted that the conditions of the past could no longer be afforded for any group of workers - the huge pension funds deficits 'proved' it. Some victory: an extra five years' wage-slavery for future civil servants.

Having managed to get the trade unions to roll over and accept unprincipled compromises that mean the abandonment of final salary schemes for new entrants into employment, employers had reason to feel cock-a-hoop. If the union could sell out future workers, then it was a sign of weakness, a welcome lack of militant leadership as far as employers were concerned (class collaboration always is). Once there was an upturn in the stock markets, what with fluctuation being the norm in the capitalist system, employers knew they could turn to their advantage the effects of increased share prices in inflating the pension funds. And the obvious way would be to demand that these swollen pension funds be deemed excess to requirements and hived off to the much needier profits pot.

Now that the pension fund shoe is on the other foot, those who both control and plunder pension schemes aim still to kick out at workers. Pension funds are seeing growth where before there was contraction. Last month, for example, BT declared that its pension fund had reached a £1 billion surplus; as recently as March it had reported a £400 million deficit.

In early February, Royal Mail was but the latest of large companies to announce exclusion of new staff from schemes that ensured a retirement payout based on a percentage of a member's final salary. This was a not insignificant move, since the Royal Mail pension scheme is sixth-largest in the UK, with about 450,000 members. At the time, Royal Mail spokesmen claimed that the cost of servicing its retirement obligations had risen by £280 million to £730 million in the 2006-07 financial year. This had hit profits, which fell in the first half of the financial year to £22 million (compared with £159 million the previous year), so it became obvious to Royal Mail's top management that pension provision had to take it on the chin.

This is merely in the nature of capitalism, of course, whose crises should always, if possible, be resolved at the expense of workers; profit, which is sacrosanct, must be protected at all times. Solicitude for profitability certainly does not extend to mere workers' pension provision. Pursuit of profit is the sole purpose of the whole system and it is during such conflicts of interest that this truth becomes starkly exposed.

Now that pension funds are moving back into the black and will soon show a healthy surplus, will the big companies admit they had acted too hastily and offer to reinstate the former schemes? And will the union bureaucrats apologise for their craven surrender and launch a militant campaign to regain what has been stolen - and more?

It should be clear to everyone, especially to 'revolutionary socialists' like the leaders of the PCSU, that a full and decent pension should be an unconditional right for all workers, not something dependent on the vagaries of the stock market or what capital says it can afford.