|Volume 48 Number 7, March 17, 2018||ARCHIVE||HOME||JBCENTRE||SUBSCRIBE|
Whose pensions are they anyway? They are ours!
A recent disgusting example of how workers' pensions are being made fair game in the most blatant manner is the closure of steel monopoly Tata's pension scheme and fraud by so-called independent financial advisers. It is a particularly crass example of how, by hook or by crook, the ruling class claims possession of workers' pensions.
Tata, which employs 8,000 people in England and Wales, announced the restructuring of its £14 billion retirement fund last year, under the pretext that it would "keep its UK loss-making operations afloat".
This is standard propaganda starting from the capital-centric viewpoint that pensions are a cost, along with any claims on company revenue that reduce its bottom line. In fact, the bottom-line profit is itself merely one claim, that of the owners of equity - i.e. the shareholders - on the massive amount of value produced at Tata by its workforce. Other claims on the new value these steelworkers create every hour of every day go to other owners of capital, such as the owners of debt, they go to government via taxes and go to active and retired workers as wages and pensions.
Viewed this way, pensions are not a cost, and forcing concessions from workers on this front is not a solution to any problem of the need for and the problems faced by steel production in Britain. In the current conditions, monopolies such as Tata are obsessed with maximising their own claim on the produced value for their narrow private interests and competitive aims in the globalised economy; it is this that is meant by staying "afloat".
Exposing how public authority has been entirely taken over by private interests, the Pensions Regulator arbitrarily accepted the argument that Tata Steel UK would be insolvent if it continued to sponsor the scheme. When Tata first decided to sell the steel plants it owned, this had nothing to with "insolvency". When prospective buyers actually bid, Tata made an about-turn and decided not to sell, due to changed market conditions and the promise of government assistance. The company decommissioned some of its raw steel mills and kept only the most lucrative facilities, jealously making sure that no competitor could get their hands on these means of production. Even so, it still held the sword of Damocles over workers' heads, threatening jobs if they did not concede and make huge concessions on their pensions.
In a move supported by the Pensions Regulator - in their own words: "We believe this was the best possible outcome for everyone involved" - the 124,000 members of the old British Steel Pension Scheme (BSPS), were given between October and December 2017 to decide what to do.
The virtually overnight "choice" presented to members was to transfer to either to Tata's inferior replacement scheme, known as BSPS2, or the Pension Protection Fund (PPF). Both schemes will return less on average to workers than the old scheme, but the default option in the case of making no choice - and many retired workers were not in any position to make such a choice due to ill health - was the PPF, generally the less beneficial alternative.
This being the case, a flock of financial advice "vultures" descended on the affected workers seeking easy pickings, in a mis-selling fraud of massive proportions. The pressing deadline created the perfect conditions for these so-called advisers to take advantage. They presented scheme members with a third option of transferring out completely via what is called a DB transfer, an option the Works and Pensions Select Committee, in its report into the closure of the pension scheme, said is "not usually in someone's interests".
That is an understatement, to say the least. According to reports, 2,600 such transfers with a total value of £1.1 billion were made, largely under this advice, which is now being reviewed by the police. There are reports of workers losing tens and even hundreds of thousands of pounds as a result.
Work and Pensions Select Committee chair Frank Field remonstrated: "Pension holders were fleeced by financial vultures."
"Once again we find the pensions regulator fiddling while Rome burns, when it should have seen this rip-off coming," he said. "All the responsible authorities must act, now, to stop more people being cheated."
Likewise, the report also criticised the Financial Conduct Authority (FCA), which has since said it is reviewing the rules on pensions advice. The report pointed out that the plan to close the pension scheme had been in place since May last year. The parties involved - Tata, the government and the Pensions Regulator - had neglected the interests of the scheme's members, the active and retired steelworkers.
This whole affair paints a particularly damning picture of the politicisation of private interests through this arbitrary decision carried out as one by a big international monopoly, the government and state authorities, a decision that violates the rights of people to a decent livelihood in retirement. It brings into relief the need for workers to organise in defence of their interests and for their own decision-making power over the direction of the economy, so that vital production is not subject to the vagaries of the market and their claims on the social product in the form of wages, pensions and social programmes are guaranteed, depriving monopoles of the power to deprive the workers of these claims.