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Title: Britains two tier pensions system
Author: Anarcho
Date: December 2, 2005
Language: en
Topics: welfare state, United Kingdom
Source: Retrieved on 28th October 2021 from http://www.anarkismo.net/article/1897

Anarcho

Britains two tier pensions system

Gordon Brown has shown his New Labour credentials by questioning the

deal agreed by the Government to allow public-sector workers to continue

to retire at 60. While Downing Street and the Department of Work and

Pensions insisted that the deal with the unions would not be unpicked,

the unions, who called off a strike when the deal was struck, sensibly

renewed their threat of industrial action.

Brown raised the pro-business standard addressing a CBI conference in

London. He was worried that the recent public sector pensions deal will

prove too expensive in the long run. Shame he had no such qualms about

invading Iraq or about finding a replacement for Trident. Clearly he is

showing the markets that New Labour’s Thatcherite policies will be save

in his hands. As such, he needs to address the needs of business. State

pensions cost them money in taxes, while company pensions become a

permanent and ever lengthening drag on profits. Something has to be

done.

What is particularly galling about the pensions issue is the hypocrisy.

It was staggering to see a CBI spokesman twittering on about

“unfairness” on the news or hear the director of the British Chambers of

Commerce arguing that “what we are going to end up with here is two

nations. That will create real resentment in the workforce.” Employers

warn of a “two-tier” pension system and John Sutherland, the CBI

president, opined that the government “must treat all equally and

fairly. It cannot expect private sector employees to work until

sixty-seven to finance the pensions and early retirement of public

sector employees who retire on inflation-proofed final salary pensions

at sixty. Society can no longer afford such schemes ...and such

inequality is unacceptable.”

Unsurprisingly, the CBI made no comments about the existing “two-tier”

pensions system, that between bosses and workers. According to the TUC,

eight out of ten of the UK’s top companies provide directors with

pensions that can pay out in full at 60 and are worth, on average, 26

times those of most employees. Moreover, directors’ final salary

pensions are most likely to build up twice as fast as the most common

rate for employees in final salary schemes. The directors of the UK’s

100 most important companies have amassed pensions worth a total of £.9

billion which, on average, would pay out £167,000 a year if claimed now.

This is over 26 times the national average of £129 a week and over 30

times the average public sector pension.

Of course the CBI is not arguing that private sector workers should

receive the same deal as bosses. Nor even the same one as public sector

workers. No, rather than level up, all workers are to have their pension

deals levelled down and they are using the issue to divide workers

against each other. The last thing that the private sector wants is its

wage slaves wanting a better deal and so they want them to help bring

down their more fortunate fellow workers down to the level the bosses

think is best. Given this, the imposition of a later retirement age in

the public sector would strengthen the private sector’s hand as it

attempts to enforce the same on its workers. As it is, the deal is

hardly brilliant as the government has succeeded in getting the consent

of major public sector unions for a higher retirement age on future

public sector workers.

Thus the bosses’ real worry about the “two-tier” system — if public

sector jobs have better pensions then private industry will have to

provide the same. It is, in other words, simply a variation of the old

argument that unions “exploit” non-unionised workers. In reality, unions

provide a minimum level of wages and conditions which bosses have to

match in order avoid uppity wage slaves demanding a better deal. As

such, the bosses’ hypocrisy about a “two-tier” system could be used to

challenge their plans and get a better deal for all workers.

The CBI’s new concern from equality and affordability is pretty narrow.

Apparently, it thinks that this society can afford the millions paid to

the bosses. In 2001, it was announced that UK bosses were the best paid

in Europe, earning an average of £509,019 a year. These outstrip those

of every other European country by more than £100,000 and had risen by

almost one-third since 1999. Meanwhile, the UK’s manufacturing employees

have become the lowest paid in the developed world.

In February, 2003, it was reported that two-thirds of the workforce were

now earning less than the average wage, up from 60% ten years

previously. The rising wage inequality was as a result of huge pay deals

for executives and directors. Top pay has been increasing faster than

for the rest of the workforce. Ironically, the strongest rise occurred

since 1997. In 2002, for example, executive pay rose by 17% — a year

when billions was wiped off the value of companies so destroying any

claim that this pay are related to their contribution to society.

The CBI president did not rally against other forms of inequality, at

the unfairness inherit in 23% of UK wealth being owned by 1 per cent of

the population or that the wealthiest 10% own more than half the wealth.

That the poorest 50% own 6% of wealth or that the wealthy have got

wealthier over the last ten years failed to raise a moment from our

advocates of pension fairness. Nor did he attack a “two-tier” system in

which the few own most of the wealth and the rest of us are expected to

put up with the crumbs which come our way. Nor did he ponder why

“society” cannot afford to pay for pensions but has enough to invade

Iraq, impose ID cards or replace Trident.

Finally, it does seem strange that the CBI, representing as it does the

private sector, should lecture the public sector on this issue. After

all, private pension schemes proved to be completely disastrous

(“mis-selling” being the euphemism of choice rather than the more

accurate fraud). Nor should we forget that it was the old pro-business

party (the Tories) who advocated these schemes after breaking the link

between state pensions with average earnings in favour of the Retail

Price Index. Even the way the CBI is framing the issue backfires on

them. For how incompetent are UK bosses anyway? They have one of the

most pro-business regimes in the world and still they worry about their

profits. No matter how slight the proposed reforms, the CBI are

guaranteed to moan about how industry cannot afford it. So much for the

wealth that an unbridled capitalist economy would produce!

In summary, the so-called pensions ‘crisis’ is really a battle. It is

between the priorities of capital and those of human need. It is a case

of what we need to live and not whether the system can afford it. If

enough pressure is generated from below, then what can be afforded will

change accordingly — as will what people want and the kind of society

they wish to live in.