Wednesday, 10 December 2008

The Tories plan to make pensioners poorer

One of the great scandals of the past quarter century in the UK has been the way pensions have been handled and pensioners treated. Pensions have slowly but surely been devalued and the result has been misery for millions in old age.

Go back 25 years in the UK and you'll find many workers in the private and public sectors on final salary pension or defined benefit schemes but these have been whittled away to almost nothing in the intervening years. Workers in the private sector now have to rely on defined contribution or money purchase pension schemes which are worth much less. When Gordon Brown became Chancellor of the Exchequer in 1997 he made tax
changes which made it more difficult to sustain final salary schemes in the private sector and New Labour have much to answer for in the pensions debacle. But its not just about Gordon. Many companies have taken pensions 'holidays' - periods when they failed to contribute to their own schemes. The same is true of local government. Employers can simply save money by refusing to contribute to employees pensions.

As a gulf has opened up between pensions in the private and public sectors there have been howls of rage from the right. It is claimed that public sector pensioners are living in the lap of luxury while their private sector counterparts are living in poverty. This is nonsense. Certainly private sector workers are suffering but most public sector workers are low paid and earn less than the average wage, hence their final salary pensions are still very low.

David Cameron in a recent speech to business leaders said "We have got to end the apartheid. We are getting into a situation now where pretty much everyone in the private sector has gone to defined contributions and the final salary schemes are closed." Now we all know what that means don't we. The Tories are planning to slash public sector pensions just as the Daily Mail have been urging them to do. The Daily Mail complains that private sector workers are living in poverty and public sector pensioners are better off - its solution, like David Cameron's - is to make all pensioners live in poverty by ending public sector final salary pensions - smart huh?

We need better pensions for everyone. If public sector pensioners are benefiting from final salary pension schemes its time to create the conditions in which private sector workers can also enjoy those benefits, by legislation, if necessary. Here is a quote from the Green Party's policy on pensions - "The Green Party would introduce a Citizen's Pension that would pay pensioners a livable amount, without means testing and would be linked to the rise in average earnings. Independent studies by the National Association of Pension Funds have shown that a citizen's Pension could be afforded today within current net expenditure on state pensions."

We live in a society with an aging population its in the interest of all of us to ensure that we can have a dignified old age.