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Year 2005 No. 137, December 8, 2005 ARCHIVE HOME JBBOOKS SUBSCRIBE

Pensioners’ Claim on the Social Product Must Take Priority over That of the Monopolies

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Pensioners’ Claim on the Social Product Must Take Priority over That of the Monopolies

Turner leaves today's pensioners out in the cold and offers just £1.36 a week more in five years' time

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Pensioners’ Claim on the Social Product Must Take Priority over That of the Monopolies

The release of Adair Turner’s Pension Commission report has once again focused attention on the crisis gripping the pensions system in Britain. Even before the report had been officially released, parts of it were “leaked” and publicly rubbished by other “leaks” from the Treasury which claimed that the calculations in the report were unsound and in particular its proposal to restore the link between pensions and earnings was “unaffordable”. To further muddy waters, the Treasury “leakers” declared that the recent agreement between the government and the public sector unions to maintain the present retirement age in the public sector at 60 would have to be reviewed. The CBI, for their part, appointed themselves as the "defenders of the private sector workers” against the injustice of Turner’s proposal that the private sector retirement age should rise to 68, demanding that this should also apply to the public sector workers and the agreement between government and the public sector unions be ripped up.

            In this way a serious problem facing the society is trivialised, the fundamental right of the pensioners to a livelihood is violated and efforts are made to split the workers, setting those in the private sector against those in the public sector. This state of affairs reflects the crisis caused in society by prioritising the claims of the monopolies on the social product without any regard to the social consequences and the public good. The pensions crisis in Britain can only be sorted out by recognising the right of the pensioners to a livelihood. These workers have contributed their whole lives to adding to the social product and their claim on it for a life with dignity and a standard of living consistent with living in Britain now, when they are no longer able to work, must be met.  

            This is the central issue which neither Adair Turner’s report or the “leaks” and political furore surrounding them address. According to Gordon Brown, Britain has the fourth largest economy in the world. A proportion of this wealth is plundered from other countries while the rest is produced by the labour of people in the country. How then can the government justify a state of affairs where according to the  National Pensioners Convention over 2 million pensioners live below the official poverty line, 25% of all pensioners  live in houses that are cold enough to cause illness, 31,000 older people died last year as a result of the cold and a recent report from Prudential states that thousands of pensioners have contemplated suicide?

            However, rather than seek a solution to this serious problem in a sober an open minded way, Adair Turner’s report persists in the one sided thinking which was evident in his interim reports. He declares that the issue is to find "a trade off between public expenditure and state pension age” and regards a pension, which represents a claim of the pensioners on the social product, as a "public expenditure burden”. Framing the issue in this unscientific manner, he calls for a public debate on the "public expenditure versus pension age trade off”. Proceeding from this one sided framing of the issue, he proposes raising the state pension age to 68, re-establishing the link between the state pension and the rise in earnings and establishing a National Pensions Saving Scheme which individuals would be enrolled into automatically but could opt out of. This scheme would be funded by individuals contributing 4% of their post tax earnings, employers contributing a matching 3% and 1% tax relief from the government. He further proposes that these funds could then be invested in "a range of funds including some bulk bought from the wholesale fund management industry”. In effect, he is proposing continuing down the road which is at the root of the crisis. It is precisely this handing over of the people’s pensions savings to the monopoly financial houses to gamble on the stock market which is a contributory element to the present crisis.  

            In the face of opposition from the monopolies to make any contribution at all to such a fund, Lord Turner justified it on the basis that it "would only add 0.6% to the labour costs of the private sector”. In this way the claims of the working class and people, whose labour produces all the wealth, are reduced to a cost item in the balance ledger while the claims of the owners of debt and capital are left completely out of the equation. They produce no wealth but their claim on the social product for payment in the form of dividends and interest are regarded as sacrosanct. However, any claim by the pensioners on the wealth they have produced through their labour can only be entertained if it can be shown how minimal it is. It is precisely this mindset which is blocking the way to finding a solution to the pension crisis in Britain.  

            Speaking on behalf of the government, Pensions minister John Hutton said that their response to the Turner proposals would be based on five tests, including whether the proposals "promoted personal responsibility” and "were affordable”.  According to this logic, which is consistent with Labour’s programme of wrecking the society in favour of the monopolies, the fate of an individual after their working life is over is an individual issue for which they must take personal responsibility. In a society in which the means of production are highly socialised and in which all are dependent for their survival on the social economy, such a suggestion represents a direct abdication of responsibility on the part of the state which presents itself as the representative of society. The doctrine of fending for yourself cannot work in such a highly socialised economy and trying to implement it will have dire consequences not only for the individuals but also for the whole society. Nor can the issue of “affordability” be used to deprive the pensioners of their right to a livelihood. In the first place, the Labour government has never run into a problem of “affordability” when it signs 30 and 40 year contracts under the various privatisation schemes to hand over money to the monopolies. Nor has it ever declared that its aggression against and colonial occupation of various countries such as Yugoslavia, Sierra Leone, Afghanistan or Iraq is dependent on meeting an “affordability” criterion. In any event, the issue is not that there is fixed sum in the public treasury out of which the claim of the pensioners for a livelihood must be funded. The claim of the pensioners is on the social product and not on the public treasury. Theirs is a claim just like the claim of the moneylenders and the owners of capital and no one suggests that these groups can only have their claim met if they are “affordable” to the public treasury. Ample means exist for finding sufficient funds to provide adequate pensions for all pensioners without increasing public expenditure. For example, a moratorium could be placed on the payment of the national debt and the money diverted to fund pensions, a special tax could be imposed on the profits of the monopolies or the money paid out in dividends and interest could be diverted to pay for pensions.

            The pensioners, working class and people’s movement must see through the disinformation surrounding the issue of pensions and fight for the claim of the pensioners on the social product for a livelihood which enables them to live in dignity and enjoy a standard of living appropriate to Britain.

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Turner leaves today's pensioners out in the cold and offers just £1.36 a week more in five years' time

Britain's biggest pensioner organisation – the National Pensioners Convention (NPC) – has criticised the long awaited report by the Pensions Commission for ignoring the needs of today's 11m older people.

            Joe Harris, NPC general secretary said: "It's taken the Pensions Commission three years and the best it can offer today's pensioners is a £1.36 a week increase in their basic state pension if they manage to live another five years. It's absolutely outrageous. One in five older people live below the official poverty line and the majority of them are women. The recommendations leave today's pensioners completely out in the cold. Lord Turner may talk about not wanting to engage in fairytale economics – but his recommendations for today's pensioners look like they've been written by the Brothers Grimm.

            "Pensioners want the basic state pension raised immediately to the level of the means-tested Pension Credit of £109.45 a week and then linked to earnings for it to be meaningful. It is in the interests of the entire population that these modest improvements are paid for out of the national insurance fund and its healthy surplus of £34.6bn.

            "If the government wants today's 11m pensioners – who are 20% of the electorate – to join any consensus on pension reform, they must raise the basic state pension for all men and women and link it to earnings now."


            The Pensions Commission will deliver its recommendations for pension reform on November 30. The NPC believes the Commission must address the following points:

            For any consensus on pension reform to be politically sustainable it must address the concerns of today's pensioners as well as future generations. Over 2.2m older people are already living below the poverty line – the vast majority of them women. To tackle this the government's reliance on means-tested benefits should be immediately replaced by a universal basic state pension of at least £110 a week that rises in line with earnings and is paid to all.

            Failing to end means-testing, raising the state retirement age or scrapping the state second pension in favour of a purely private scheme would all be disastrous, but missing the opportunity to raise the basic state pension for today's older people would be unforgivable.

            Compulsion: Compelling individuals to put money into private pension schemes that have no guarantees is the economics of the casino.

            Raising retirement age: Real choice about when to retire only comes from having financial security. Any increase in the age at which you can draw your state pension will ultimately penalise the poor.

            Citizen's pension: A universal pension rightly acknowledges contributions made outside the workplace such as raising a family or caring for dependents, but must be set at a decent level to be meaningful.

            Tax rises: Increases in contributions should only be made after having used the £60bn surplus expected in the national insurance fund, paying compensation for money taken from the fund by the Treasury in “green taxes” and redistributing the £19bn tax relief given on private schemes.

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