For teachers and civil servants, as well as for many other public sector workers, the opening salvo in the war against cuts is turning out to be a momentous battle to defend pensions. NUT, ATL and PCS have all delivered substantial majorities in strike ballots on this issue (92%, 83% and 61% respectively). UCU,
which began striking over pensions in March, has a live ballot and is likely to join the other three unions in action. The first strike will to be held on 30th June, a coordinated mass strike involving over half a million workers.
Other unions are almost certain to join the strike movement in the autumn. Even arch moderate Dave Prentis, General
Secretary of UNISON, is promising the most sustained campaign of industrial action since the general strike of 1926, vowing not to back down until the government drops its attack on public sector pensions.
Gold plated pensions?
For several years now, the ruling class has been waging a propaganda offensive against “gold plated” public sector pensions, which are described as “unaffordable” and “unsustainable”. In a classic attempt at divide and rule, the bosses are trying to pit private sector workers against their brothers and sisters in the public sector by describing the difference between public sector pensions and those in the private sector as a “pensions apartheid”.
It is true that public sector pensions are generally better than those in the private sector, but this disparity has only arisen because the bosses have already successfully attacked pension schemes for workers in the private sector. Only 21% of private sector final salary schemes remain open to new members, and this figure is falling almost daily. The rest have to take their chances on pension funds linked to the performance of stocks, shares and bonds.
For people retiring now, the average ‘pension pot’ from such funds will generate an income of less than £3000 per year. Far from being “unaffordable” and “unsustainable”, the total value of public sector pensions is less than 2% of GDP, and is expected to fall in the medium term. Most local government workers receive pensions of less than £5000 per annum. The average teachers’ pension is less than £10 000, with only 5% of them over £20 000 (mostly head teachers and other senior managers.) And of course, attacking public sector pensions won’t do anything to help private sector workers. On the contrary, the race to the bottom that the Con-dems are trying to set in motion will ultimately make things worse for everyone (except the rich, that is.)
The real pension’s apartheid is not between the public sector and the private sector, but within the private sector, where the disparity in pension provision is obscene. Fred Goodwin, famous for running RBS into the ground, is drawing some £703 000 every year. For ordinary workers however, the private sector offers little in the way of decent pensions.
You’re all living too long!
Both private sector bosses and government ministers try to justify these attacks on all of our pensions by referring to rising life expectancy. The bosses see the fact that many workers are living longer, which should be a cause for celebration, as a huge problem. Since 1971 the life expectancy of a 65 year old has risen by four to five years, and is forecast to rise by another 3 years by 2050. The government’s plan is to claw this back by raising the official retirement age to 68 (for those currently under 30) and possibly even higher in subsequent years.
But these forecasts conveniently ignore the fact that the option of being able to retire early is a factor in raising life expectancy. If we are all forced to work into our late 60s, life expectancy will undoubtedly fall back substantially.
The real agenda of the Con-dems has nothing to do with the ‘unfairness’ or ‘unsustainability’ of public sector pensions, and everything to do with cuts.The Government intends to spend £99 billion per year less by 2014/15 than it does now, which constitutes the biggest real terms cut in public spending since the 1920s.
Public sector workers did nothing to cause the crisis, while those who did cause it are back to their multi million pound bonuses,which they can enjoy in still-protected tax havens. Yet it is public sector workers who are being forced to pay the price through wage and pension cuts.
Hutton the human shield
The Con-dems cleverly brought in a human shield in the form of former Labour minister John (now Lord) Hutton to chair its Public Services Pensions Commission. Hutton’s remit was to examine the “growing disparity between public sector and private sector pensions” and to deal with the “unaffordability” of public sector pensions. Hutton’s commission reported its final recommendations in March 2011. These can be summed up as Pay More, Work Longer, Get Less. Public sector pension contributions will rise, in the case of teachers from 6% of salary to 9.5% of salary, which, in the context of the current pay freeze, is in effect a 3.5% pay cut. The normal retirement age will be raised to 65 (for most public sector workers it is currently 60), although this will subsequently rise in line with the state pension age (to 66
by 2020, 67 by 2036 and 68 by 2046.
The indexation of pensions will change from the Retail Price Index to the Consumer Price Index, a fairly new measure of inflation which includes relatively cheap consumer goods such as electrical products, but excludes such luxuries as housing costs. It is reckoned that this alone will reduce the lifetime value of a pension by 13 -14%. (The government intends to use CPI to index all pensions, including state pensions.)
Basing pensions not on final salary, but on a career average, will impact mostly on those who get promotion, but will probably reduce the value of most workers’ pensions because most people start at the bottom of a pay scale and earn more in later years.
The Con-Dems aren’t the first to attack our pensions . The Labour Government tried to cut teachers’ pensions in 2006. The NUT unfortunately negotiated a settlement that protected the pensions of currently serving teachers but which brought in a new pension scheme for all new entrants from 2007 onwards. The normal retirement age for new entrants was raised from 60 to 65, which meant that even with an actuarially reduced pension they would not be able to take early retirement until the age of 60. The union leadership proclaimed this a victory, although the deal has turned out to be a Trojan horse which paved the way for the current attacks. It is never a good idea to accept worsened conditions for ‘new entrants’ because before too long those new entrants comprise a substantial proportion of the membership. We now have a union membership in which our youngest and potentially most militant members have already been sold down the river by the union, a situation which does not bode well for building a united fightback.
Dignity for all in old age
Beyond defending public sector pensions we need a strategy to unify workers in the public and private sectors in pursuit of decent pensions for all. The simplest way would be to take the entire pensions industry and all its assets into public ownership and provide all workers with the security and benefits of a public sector pension. (There is in any case a precedent for private sector workers belonging to public sector pension schemes. Teachers at Eton, Harrow and many other public schools currently belong to the same Teachers Pension Scheme as those of us in the state sector. The government wants to close this loophole to make it more attractive for private business to invest in new academies.)
Defending and extending public sector pensions is only the first step in an ongoing struggle for dignity in old age. It is a shameful indictment of capitalism that, following a lifetime of toil, the elderly working class comprises one of the most impoverished sections of society. Retired workers should be treated with respect and dignity, with not only a decent state pension but also free provision of housing, transport, quality health care and all the necessities of life.
A blatant provocation
The attack on public sector pensions is so blatantly unfair that we can only assume that it is a deliberate provocation. Around the globe the ruling class resents the strength of public sector unions, which are in many cases, following the defeats of the industrial unions in the eighties and nineties, the last bastion of working class organisation. The Condems would dearly love to inflict a heavy defeat on us over pensions in order to clear the way for further attacks and privatizations across the whole public sector. The unions need to respond by hitting back a lot harder than they expect us to.
Day of rage !
When Sarkozy attacked the state pension in France, the youth joined the protests en masse. Young people in France understood that it is in their interest to defend pension provision, not only out of a sense of basic solidarity, but also because raising the retirement age means there are fewer jobs available for the young. We need to build the same level of solidarity with the pensions struggle that is unfolding in Britain today.
The 30th June will be the first coordinated mass strike involving at least the PCS, NUT, ATL and UCU unions in defence of public sector pensions. We need to draw in all sections of the class, and especially the youth, in order to make 30th June a day of rage across the country, as a first step towards a growing mass strike movement in the autumn.
Roy Wilkes is a member of Socialist Resistance and a school NUT rep in Bury.