A charity points out the effects of capitalism in the UK on working until you drop . Charities, will be unnecessary in a socialist society, are always calling for more government action, or asking for more money to be thrown at a particular problem, which in itself is caused by capitalism, are merely seeking sticking plaster solutions on open wound issues. There’s only one solution to society’s ills -socialism.
You’re never too old, or too young, to fight for socialism.
‘Our analysis shows that, each year, over 92,000 adults die before they can draw their pension. This figure will rise by thousands for every year the pension age increases. That means thousands more dying people and their families will lose out on this crucial benefit. The poorest in our society and those living in areas with low life expectancy and high working age poverty will be most badly affected. Nobody should die in poverty, and we are calling for change.
For each year the pension age is increased, thousands more people will die without being able to access their pension.
In 2022, 1 in 7 deaths (14%) in the UK were of adults who died before they were able to access their pension at the age of 66 (excluding those who died from causes such as poisoning, injury, accidents or related to pregnancy and birth), equating to 92,000 people. State Pension age is due to rise to 67 in 2026/7, which will lead to an extra 7,700 individuals dying before receiving any of their pension.
With an increase to age 68, as currently proposed to happen between 2041 and 2043, an extra 15,800 people per year compared to today would be denied their pension before they died. This would equate to 108,000 people each year.’
https://www.mariecurie.org.uk/blog/rising-state-pension-age-poverty/383583
The below is from the Socialist Standard August 2002
‘The class war, between the owners of the means of production (the capitalists) and those compelled by threat of poverty to sell their capacity to work (the workers) is an essential and continual feature of capitalist society. Romantic notions of class struggle – of rowdy mass meetings, strikes, battles on the barricades – concentrate on the exceptional forms, rather than the brain-throttlingly dull reality of the class struggle of every day life. In this category we can place things as seemingly dull and complex as retirement pensions.
Pensions account for a massive proportion of economic activity in the UK. According to the Office of National Statistics self-administered pension funds (funds set up by employers to pay occupational pensions, or private pension schemes) had a market value of £765 billion in 2000, paying out a total of £29 billion in benefits in the same year. Between them they account for some £300 billion-worth of shares in businesses, giving them considerable voting power in publicly quoted companies. This is alongside the £38 billion paid out by the government in state retirement pensions.
All capitalists now?
This concentrated ownership through pension funds has led some commentators to claim there has been a fundamental change in the basis of society. It’s not just overt pro-capitalists who look at things this way. Many leftists have seen controlling pension investments as a way of bringing the economy under social control. Indeed, the Labour government still see encouraging pension schemes to invest in riskier long-term venture capital projects as a way of overcoming the British productivity gap.
Funded pension schemes operate by investing the money paid in by or for scheme members on the stock exchange, and paying pensions from dividend income to those members who have contributed enough. Through the investment decisions of the pension trustees, the commentators maintain, the pensioners have control of vast investments. Thus, workers, they claim, must own part of the means of production, and have a vested interest in receiving a share of the profits. They would point out that in 1996 57 percent of pensioners reported to be receiving income from such occupational pension schemes.
The changes made by pension funds, though, are largely illusory. For starters, “an individual’s stake in an occupational pension scheme cannot be ‘cashed-in’” (Social Trends 2002, ONS, p.102), i.e., the pensioners do not own the capital of the pension funds. Coupled with this is the fact that the pension fund trustees are bound by strict legal guidelines regarding the manner of their investment: their first duty is to invest to maximise the profitability of the funds. That is, via their control of the state, the capitalist class exercise a form of collective control over the pension funds to ensure that their investment decisions are aimed at maximising their income from profits. Finally, even though 57 percent of pensioners receive an occupational pension, this accounts for only 27 percent of their total income. In other words, most workers do not earn enough to pay for a pension that will entirely support them on retirement.
From a Marxian perspective huge pension funds still mean capitalism as per usual. The need for pensions arises from the fact that as workers get older, they become less able to work, and become surplus to the requirements of capital. Those workers have spent their lives selling their capacity to work, in return for a wage which represented the cost of maintaining and reproducing their capacity to go on doing that work. If they cannot work, they have no other means of securing their means of living. Since the capitalists do not want to hire them, and workers are unwilling to work until they drop, the capitalist class has to pay out to keep workers alive upon retirement. So in this sense pensions reflect the existence to the class struggle.
As pension payments are a huge burden on them the capitalist class have an interest in ensuring that the pensions paid out do not get too out of hand. The capitalists at the sharp end of wage negotiations are well aware of this, as Larry Elliott noted in his Guardian column, when discussing TUC plans to make it compulsory for employers to make full occupational pension contributions. This, he wrote, “would eventually be paid for by workers through lower wages”. (Guardian, 24 June). That is, pensions are effectively deferred wages, with employers weighing their expected contribution to the pension fund off against current wages laid out (in the 1970s, this calculation was used as a way of circumventing wage restraints via reducing immediate employee contributions or just raising future pensions).
Maximising profits
Capital is always seeking to maximise the profits made from pension funds. In 2000 pension funds paid £3 billion in commission to stockbrokers alone, and paid £329 million in tax. As can be seen from the pension mis-selling scandal, there is plenty of incentive there for private pension funds to want to attract investors, to the extent of fraudulently persuading people to invest. The size of their repayment, £12 billion, indicates the scale of the scandal and the amounts they stood to gain from it.
As the TUC point out in their document Pensions in Peril: the Decline of the Final Salary Pension (http://www.tuc.org.uk/pensions/tuc-4672-f0.pdf), Inland Revenue statistics indicate that employers have netted a sum of £19 billion through reducing pension contributions or taking contribution holidays on the back of the surpluses in the pension funds between 1988 and 2000. That is, they pocketed profits from the pension funds by the back door, using the revenue they generated to cut the amount of money they need to pay to wages out of current receipts. By way of contrast, over the same period the workers only got back some £10 billion out of the surplus by way of reduced contributions and increased benefits.
Of course, these are just the legal ways that capitalists seek to gain from pension funds. As has been seen over the years, pension fund present a fabulous opportunity for fraud and chicanery on the part of our masters. Robert Maxwell famously stole £400 million from the Mirror group’s pension fund. “I own the pension scheme,” he declared, and proceeded to use its wealth to prop up his empire. This resulted in substantial changes to the law, including preventing pension funds from investing more than 5 percent of its funds in the employers’ companies.
Of course, it’s not just private employers who try to plunder these shimmering hordes of money. When the bus companies were privatised in 1986 in England, the state withheld £300 million from their pension schemes, and a further £250 million in Scotland. It took until last year, through countless legal wrangles, to get the money back, and even then the treasury held on to £100 million of the money from Scotland.
Due to burgeoning costs, employers are currently scaling back drastically the number of final salary (or defined benefit) pension schemes, that is, pensions where the final annuity is guaranteed as a proportion of the employee’s final salary by the employer. That is, the onus is on them to make up any shortfall in receipts from the fund and pay the pension. This is as opposed to defined contribution pensions, wherein returns are not guaranteed and will only apply according to the sums invested, as with any other personal pension. This exposes the pensioners to the full market risk of investing in the stock market casino. According to the TUC, there were 5.6 million workers on defined benefit schemes in 1991, and this is projected to have fallen to 3.8 million in 2001. This change in pension terms means a fall in employer contributions (defined contribution schemes are cheaper for them) and exposes them to less risk.
Whilst many point to changing demographics – with an increasingly ageing population in Western countries – as a key reason for the pensions problem, there are several other factors impelling capitalists to try and cut back on their pension costs and liabilities. As we have seen recently, one is the problem of a falling stock exchange.
Declining value
Between 1999 and 2000 pension funds’ total value fell from £812 to £765 billion. Contributions from employees and employers remained relatively stable over that period, but the value of shares held by the pension funds fell from £353 billion to £295 billion. This had the knock-on effect of reducing income from dividends – in 2001 dividend receipts fell from £13.02 billion for the previous year to £11.85 billion. According to the Guardian (2 July), over three-quarters of local authorities have deficits in their pension schemes, some of which will be compelled to increase council taxes to cover the cost.
On top of this, changes in corporate accounting, some which were inspired by the ongoing problem of transparency over pensions, mean that companies must quote their potential pension liabilities in their accounts, making them less potentially attractive to investors as they weigh against current profits. When British Airways changed to a defined contribution pension scheme their chief financial officer is quoted as having said that “the change to a defined contribution pension arrangement for future new UK staff is a measured and necessary response to the competitive environment in which British Airways operates”. That is, the competition for investment and profits between capitalists.
Given the scale of the problem, it’s no wonder that pensions are becoming an increasingly large political issue. Several trade unions, mostly noted for their quiescence over most matters, are actually threatening strike action over pension funds – largely since a great deal of the importance of unions lies in their role of negotiating and guarding employees pensions. The Tories, likewise, have begun to harangue the government over pensions, trying to win over workers’ votes by being the party of prudent finance and protectors of pensions.
The government themselves are still recovering from the outrage caused by their pensions increase of 75p in April 2000, and are currently trying to make up for it by providing a series of means-tested benefits. That is, rather than give extra income to pensioners, they guarantee to pay directly for certain items (e.g. winter fuel), with lots of strings attached. Currently, with the ongoing goal of reducing the size of the state sector in mind, the government aims to have 60 percent of pensioners on personal pensions rather than state pensions, moving risk to individuals and moving more money from the current consumption through taxes onto investment and accumulation on the market.
By moving more pensions to the personal and occupational sector, the government will be transferring dependence over to people’s employers and direct wage packets, thus increasing the level of market discipline on the labour force. That is, it is part of the continuing function of the state to impose the wages system on the majority of people and maintain its existence both in terms of physical maintenance of the system and providing its ideology.
There has always been strong ideological side to the pensions system. The Tories, for instance, favour private pensions and individual savings because it promotes the consciousness of personal responsibility and property (and also has the fringe benefit of moving some of the administration costs of pensions off onto the commons of peoples’ free time). Labour, however, historically said it believed in the state pension as a means of generating a sense of social belonging and responsibility.
These, of course, also relate to the different interests between different forms of capitalist appropriation of surplus value and the interests of different sections of the capitalist class. That is, the Tories’ friends in the City of London versus the labour intensive industries backing Labour.
For workers, the struggle is not only over the size of pensions, but over identity, security and, ultimately, working conditions too. The pensions problem within capitalism once more proves the market economy’s incapacity to go beyond the limits of the wages system, and adequately provide for the needs of those who have worked all their lives. As the capitalist class endeavours to encourage us to share their interests, we find our lives opened up to the chaos and insanity of the stock market casino. But the market system cannot provide any security for us in the long run, which is why we need to turn the class struggle on the economic front into a fight for a society based upon the direct satisfaction of needs.’
Pik Smeet
https://socialiststandardmyspace.blogspot.com/2023/08/pensions-pay-and-poverty-2002.html