Pensions ...and it all began in Brussels
WORKERS, NOV 2005 ISSUE
When were the battle lines over occupational pensions drawn? Three years ago, with the European Directive on Occupational Pensions. That was followed by the Pensions Act 2004, a laudable act that introduced the Pensions Protection Levy and thus led the unions into believing it was about protecting workers whose pension schemes had been looted by private companies.
In reality the act was preparing the ground for ending final salary schemes, reducing scheme terms and conditions, posing flexibility and choice against the reality of pensioner poverty and means-tested benefits, institutionalising employer pensions holidays and yet taxing the seed corn at the same time.
The net result was that pension schemes particular to Britain's industrial development and past wealth-generating manufacturing base, were and are undermined. Many of these changes were incorporated in the Finance Act 2004, especially the timetable for smashing public sector pensions.
The process does not end there. Within the scheme specific negotiations will arise: higher contributions, the "flexibility" to work until you die, the resistance to trade union pensions trustees ever exerting control over the investment of the schemes, the top-slicing of schemes by specialist government taxes, as continues to happen, for example, to the Mineworkers Pension Scheme, and so forth.
The frozen asset of workers' pensions in the private sector alone is estimated to be in the region of £750 billion. When the book value of public sector schemes is added to this total, then a further huge slice of accumulated wealth can be added.
There is an estimated surplus of £40 billion in National Insurance funds. Much of these surpluses relate to dead generations, on which the government and the City finance houses intend to gorge. This, of course, is what the EU Occupational Pensions Directive was designed to achieve.