viewpoint Steve Bird says that unions need to lead a fight for better benefits


Workplace pensions are now under siege


W


orkers in Britain who will rely on state benefits in retirement will have pensions equal to just 16 per


cent of their salaries on average, making them the third worst off among the wealthy nations. This reality, highlighted in recent figures from the OECD, ought to shame those politicians who claim government pension reforms are fairer to the lower paid. Add to this increases in the state pension age and plans to extend this to 67 by 2028 and the political choice being made for us is clear: work longer or see living standards plummet. But the pensions crisis is about more than just the squeeze on state benefits. It is also a battle that is being fought over who is to pay for 20 years of neglect and robbery that have left workplace pensions under siege or worth a fraction of what they need to be.


It is also a social and economic time bomb, as millions of young employees face a future with underfunded pensions or with resources that will run out as they live longer. Like journalists at the BBC a few


years ago, FT journalists have voted overwhelmingly (92 per cent in favour) for strike action over pensions. The attempt to close down our Final Pay (Defined Benefit) scheme will mean a big minority of staff losing up to half of their promised pensions. But our conflict has also highlighted the plight of the majority at the FT who, having joined after 2003, have had no choice but to join the company’s Defined Contribution scheme. They, like many private sector


employees, have been victims of the stampede by employers away from


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Even companies such as the FT, who aren’t facing a pension deficit or a profit squeeze, can jump on the bandwagon


the DB pension schemes that were the norm and that provided staff with a guaranteed income at the end of their careers. By forcing employees onto DC pensions, businesses save millions in contributions and millions more by getting employees to bear the risk of their pensions investments. Even companies such as the FT, who aren’t facing a pension deficit or a profit squeeze, can jump on the bandwagon. The erosion of company pensions


makes for a sorry history. In the 1980s, pensions “liberalisation” by the Conservatives saw the first assault on DB pensions and led to £11billion in mis-selling claims. Robert Maxwell’s theft from Mirror group pensioners led to increased scheme costs to offset new definitions of risk. In 1997, Gordon Brown added to the pressure by cutting tax relief on pension fund dividends. Meanwhile, in


the late 1990s, companies saved many millions of pounds as they stopped their pension contributions and let the stock market boom do the work. The market crash and new ways of accounting for pensions deficits heralded an all- out attack on DB pensions in the 2000s. There has never been an attempt to get companies to pay back missed contributions.


These days, longer lifespans and


low interest rates are cited as reasons to make employees take the risk and lose the benefits. While these are real factors, behind them stand a government and ranks of private employers queuing up to pass all the cost and responsibility for pensions on to us as individuals before we notice. It is easy for staff to be wrongfooted: pensions can be a complex subject and future benefits seem remote, but pensions are simply deferred wages and a change to your pension scheme is a wage cut, only one that you may not notice until it is too late. As trade unionists, we can provide the information our members need to make clear judgments about their


future but we also need to lead the fight to improve it. There is a lot at stake.


Steve Bird is FoC of the Financial Times chapel @ftnuj


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