Monday, August 05, 2013

The attack on pensions

Today's pensioner's are yesterdays workers - they built the houses we live in, raised us and fed us. Workers are facing attack on their living standards under the guise of pension reform. The government declared that state spending should be cut and it was decided to make the workers pay. The choice of reform is between raising contributions, lengthening their duration or lowering pension amounts or more likely, a combination of all three.  We pay more today to get less tomorrow. We are told we face a crisis. People are living longer, there is a demographic timebomb, we have no choice but to accept reductions in our pensions, the need to work longer, contribute more and get back less in the end. In reality, none of this is true. The government is simply using those excuses and the financial crisis to launch an  attack on working people and the concessions we have extracted from the system for ourselves. The ones being sacrificed on the altar of economics are society's oldest and frailest,



Regarding pensions there is a great confusion. Too very often pensions are not understood as wages. The wage is the sum of money necessary to the reproduction of any one's labour power. This amount is ever renegotiated following, in particular, the balance of power between workers and bosses, helped by their state. The work contract is this balance of power's formalization. Amongst contractual elements is the one which is a guaranteed income for one's old age. That's why pensions have  been for a long time featured as one of class struggle's great factors. A pension is nothing else than wage whose instalment is delayed until a worker's retirement.

Older people have not already funded their own pensions out of National Insurances  contributions paid for all their whole working lives. In fact, people who are paying NI simply pump it into the Treasury, which then doles out money to departments. It's basically a tax, from which pensions, benefits and aircraft carriers are paid from. It is not a fund that is invested in order to achieve growth - even though this was the way it was sold to the working class. Workers pay a percentage  of their wages for the duration of their working lives into the state pension pot. This goes not into a specific account but into the general budget. At the end of their working lives the workers then get paid out of central government funds (taxes, other contributions etc) until they die. Private pensions are different.

 In the the case of occupational and  private pensions it goes into a pension account which then uses investment to build itself up, and supposedly maintains the extra via the use of new entrants. This money is controlled by trustees, usually drawn from senior executives and trade union representatives.

 Very little of it is actually invested in production. Whereas once you'd buy a share and expect to see a dividend every year (your share of the company's surplus value extracted from the worker), nowadays investors buy shares with a view to selling them at a profit at a later date. A share is only an investment in production at the point it actually leaves the company's ownership. Everything after is simply speculation and the 'profits' made have nothing to do with capitalist accumulation. (Incidentally, the increasing dependence of capitalism on these fictitious 'profits' rather than normal accumulation is one of the hallmarks of decadence which is being discussed on the other thread.) Of course, because there is actually no real substance to these financial facades, the whole system is very vulnerable to collapse. This crisis has basically appeared because the stock market crash a few years ago wiped out trillions of dollars from these funds which cannot now meet their obligations. Even if the stock market recovers (in some ways it has), the capitalist class  can't take the risk of future shocks leaving them with a massive bill to pay. Hence the reason why they're slashing pensions everywhere. Before the crisis companies had been  contribution holidays, because the stock market went up so much they didn't pay in as the funds had enough money now with the recession some  threaten to go bankrupt if they are asked to make up the pension fund shortfall.

Today, it is all about this part of our wages. Ignore all the red herrings about unfairness to younger generations as life expectancy grows. They are only smoke screens set by bosses and the state in order not to confront the real issue: the one of the wage, of the remuneration exchanged for the use of labour power. Austerity is an attack on all the working class.

The looming gloom of a poverty stricken old age should make us re-examine the capitalist economy and discover an alternative one without  internal contradiction and crisis. Capitalism  no longer guarantees workers a decent retirement. The majority of the working class now face being worked until they drop dead. The working class, the source of all wealth, can provide itself with the economic security by organising itself socially. 

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