Roy Wilkes looks forward to the debate on pensions at the National Union of Teachers’ (NUT) conference.
There is a strong possibility that NUT members will be balloted for national discontinuous strike action in defence of our pension soon after Easter. This follows strike action over the same issue by UCU members in March. For teachers in all sectors of education, as well as for many other public sector workers, the opening salvo in the war against cuts will be a momentous battle to defend our 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 often 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 pension schemes for workers in the private sector have already been successfully attacked by the bosses. 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 which the Con-dems are trying to set in motion will ultimately make things worse for everyone (other than 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. (If he had been sacked instead of being allowed to retire, he would have had to get by on a mere £416 000 each 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 fact that many workers are living longer, which should be a cause for celebration, is instead seen as a huge problem by the bosses. 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
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. (To put this in context, total education spending is now £89 billion.) Since it politically difficult (for now at least) for the government to axe large numbers of teachers’ jobs, the cost of the savings in education will, in the first instance, come from cutting the pay and pensions of teachers and other staff.
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.
(1) Teachers’ pension contributions will rise from 6% of salary to 9.5% of salary, which is in effect a 3.5% pay cut. (In point of fact, Osborne couldn’t even wait for Hutton to report before announcing that this contribution increase will be phased in from 2012.) The combined effect of this contributions increase together with the pay freeze will be a 12% fall in real income between 2010 and 2013.
(2) The normal retirement age for all teachers will be raised to 65 (for most teachers 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 idea of teaching until the age of 68 is regarded as a cruel joke by teachers.)
(3) 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 which 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.)
(4) Basing pensions not on final salary, but on a career average. This will impact mostly on those who get promotion (which is why members of ASCL, the union for secondary heads and deputies, voted by a huge majority in an indicative ballot to take industrial action for the first time in its history.) But this measure will probably reduce the value of pensions for all teachers, not just the heads, because everyone starts at the bottom of the pay scale and earns more in later years.
The Con-Dems aren’t the first to attack our pensions though. The Labour Government tried to cut them in 2006. The NUT 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.
Instead of trying to defend the flawed and divisive 2006 deal, our response to the government reneging on that deal should be to recognise that all bets are off and to therefore demand a decent pension for all with the right to retire at 55.
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.
Day of Rage!
When Sarkozy attacked the state pension in France last year, 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.
It is looking likely that 30th June will be the first coordinated strike involving at least the PCS, NUT 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 entire country.
Roy Wilkes is a member of Socialist Resistance and a school NUT rep in Bury.