From Socialist Voice, November 2007

Your pension—your future

It is not commonly known that employers gamble with workers’ wages, in the world’s biggest global casino. Pensions are deferred wages; they are as much yours as the money put into your account each month. Yet the trend in company and personal pensions is to invest them rather than save them. This way the company can make money from them while transferring the risk and cost from themselves to you. They are gambling with your money.
     What do we mean when we say that pensions are deferred wages? Who makes and creates your ordinary wages? You do. By working, you create the value of the product or service the boss sells. They then must pay their expenses, such as rents, technology and labour costs. What is left is the profit you created but that the boss keeps. Your pension is part of what you earn. It is wages that you earned and put aside for a later date.
     Pensions are now under attack in Ireland, and around the world, from a system desperately trying to create and retain increasingly difficult profit levels.
     Pensions are an easy target, because most people don’t fully understand them or care about them, with, naturally enough, little or no effort at explanation from the state or companies. They also do not appear as an obvious part of what you earn. To defend them we must begin to conceive of them as ours.
     The ideal pension situation in contemporary Ireland would be if your taxes paid throughout your life to the state would cover a pension of two-thirds of your final salary—enough to keep you in comfort in your retirement. In this way also increases to your monthly or weekly pay could be fought for, as you would no longer need to defer some for your retirement.
     This would be the ideal within a capitalist state, but we are a million miles even from this.
     State pensions now provide less than a third of final salary; and two-thirds of those retired are at risk of poverty. While the Government spends €1.6 billion a year on this, it spends €1.5 billion on tax relief for personal pension contributions. The more you contribute the more tax relief you receive, which thereby serves as yet another tax break for the wealthy.
     As already mentioned, the norm now in company pension schemes or personal pension plans is to invest the money saved in the global market, risking—and often losing—savings for your future.
     With the market now performing so poorly, many pension funds and many people’s savings are actually worth less than what they put in. So you might have saved €20,000 but your pension might be worth only €15,000!
     Some will say this is inevitable, as if there are hidden forces behind it. The reality, however, is that companies are driving this agenda, and unless workers stand up for themselves and demand protection of their own pay, the bosses will continue to drive conditions down. Workers need their unions to fight to save pension schemes from the corporate profiteers.
     The IBOA is one union making progress in tackling the pensions crisis for new bank officials and future ones. It must be noted that this battle is being fought with the basic union principles of unity and solidarity, as it is existing IBOA members fighting for what affects largely new and future employees.
     The IBOA has been able to achieve this unity and support in practice by building in guarantees for existing pension arrangements and also, in the latest case in Bank of Ireland, a commitment to a salary review for all employees in the near future.
     The changes taking place in the financial sector in pensions are similar to the industry norm. Banks are trying to transfer the cost and the risk of pensions from themselves to employees. They are getting rid of a type of pension known as defined-benefit pension, where your two-thirds of final salary is guaranteed, for a new-style pension known as the defined-contribution pension, where you commit a certain percentage to your pension each year; the employer does the same, and then gambles it all in the global casino, and what you get on retirement depends completely on market performance.
     The IBOA was correct to identify this as an attack on its members’ conditions without financial justification, as the banking industry remains highly profitable.
     The union has recently negotiated very successful deals with AIB and Bank of Ireland, stopping the banks’ preferred defined-contribution scheme from being introduced and negotiating new “hybrid” pension schemes for new employees in each bank.
     This new scheme, though recognised by the union as inferior to a defined-benefit pension, is far superior to what the banks were seeking to introduce and so is an important defensive victory for unions and for the maintenance of decent working conditions. Both hybrid schemes have a larger part as defined-benefit and a small part as defined-contribution.
     This does not completely prevent the banks from gambling with your wages, but it does at least guarantee you close to, if not exactly, a pension of two-thirds of final salary.
     In the case of Bank of Ireland they have also built in a better permanent health insurance scheme, so employees suffering long-term illness will now benefit from pay even after their first year’s absence from work.
     On top of this, and to encourage employees to save in their pension for the future—a critical necessity in today’s climate—the IBOA negotiated a 3 per cent pay increase for anyone who contributes 1 per cent or more to this new pension, thus making their pension cost-neutral if they contribute 3 per cent annually.
     The lesson today is that your employer doesn’t care for your future, the state will do nothing to protect or help you, and you can do little by yourself. Only by organising in unions can we stop the “race to the bottom” that our terms and conditions are suffering under. Remember, a pension is your right: it’s your pay.

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