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Pensions under threat

Divide and rule game looks to undermine private and public sector workers' retirements

The number of people with final salary pensions in the private sector has declined dramatically in recent years.  There are now only 3.6 million private sector employees in company pensions and many of those are in middle and upper management. The savaging of private company pensions has left millions more dependent on the meagre basic state pension in old age, a state pension that an OECD report published in June 2009, found to be one of the worst in the developed world with income on average just 31% of pre-retirement earnings.

To add insult to injury the government now intends to force people to work even longer to earn the poverty level state pension.  The coalition government has brought forward Labour plans to increase the pension age starting in 2020 when the retirement age will rise to 66 years old. The justification for this rise in the pension age is that we are all living longer. What the government fails to mention is that some are living longer than others. For example a manual worker in Glasgow retired at 66 would have 13 years (on average) of retirement left. A man in Kensington & Chelsea would have 22 years to enjoy.

Furthermore the government claims about living longer fail to take into account health inequalities that exist prior to the death. Study after study have shown that manual and low paid workers begin to suffer with serious health problems far earlier than the middle classes. This means that not only do the low paid workers die younger their quality of life in retirement due to poor health is much worse than the better off.  Increasing the retirement age can only increase these health inequalities. Forcing people already in poor health to work longer can but lead to a further deterioration in their health and increase the likelihood that they will die even sooner.

With increasing number of private sector workers dependent state pension the government has now set about destroying public sector pensions provision.  In order to justify their attacks they have filled the newspapers with stories of public sector workers receiving massive pensions. These stories are largely nonsense, for example the average pension in local government is just £4,000 a year, dropping to £2,800 for women.
The value of these already paltry pensions is set to fall under government plans, in the future they intend to link public sector pension increases to the Consumer Price Index (CPI). Currently pensions are linked to the Retail Prices Index (RPI) which typically measures inflation much higher.

The switch to the CPI will mean that the true value of pensions will be continuously eroded by inflation. This will mean that as the real value of public sector pensions declines, state workers, like private sector workers, will be increasingly dependent on the state pension in old age.
The defence of public sector pensions should be central to the campaign against cuts - but the fight must not end there. The government hopes to divide public and private sector in order to weaken opposition to the cuts. This can be countered by linking the fight to defend public sector pensions to a demand for a massive increase in the state pension and opposition to the increase in the retirement age. The government hopes to divide workers; the pension issue is the means to unite them.

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