Workers' Fight workplace bulletin editorials, 28 February 2011

Workers' Fight workplace bulletin editorials
28 February 2011

Ford is just the latest company to announce that it intends to benefit - to the tune of £400 million - from the Con-Dem's change in pension policy and at workers' expense!

The government presented their change to the index-linking of pensions - the rise in pensions in line with inflation each year - as a way of being "more accurate" in measuring price increases. But it was yet another blatant way of cutting costs by making the working class pay.

And what at first appeared as an attack on public sector pensions and index-linked welfare benefits has now been exposed as affecting public and private sector workers alike!

By linking pensions to the lower Consumer Price Index (CPI) rather than the higher Retail Price Index (RPI) - something which is supposed to be implemented by this April - bosses can expect to make windfall gains, we are told, totalling £15 billion! As one pension expert explains: "this is a reduction in the value of pensions to pension scheme members and is a transfer from them to shareholders".

Robbery by government "order"

Companies would gain both directly, by paying less out in pensions, and indirectly, by cutting pension liabilities on their balance sheets.

By the government's own estimates - the immediate gain should be £22.1bn shared out by all companies in lower payment "flows" to retirees, plus £60.9bn in their stock of pension liabilities (the amount representing pensions on their balance sheets) - which makes a grand total of £83bn!

What a bonanza! It is reminiscent of the late 1980s to the mid-1990s, when there was a similar government-licenced raid on pension funds, many of which had, at the time, gone into surplus. And never mind the black hole that suddenly appeared when the stock market went down and there was no longer any "contingency" fund for this!

Only today, the difference is that the government is creating the opportunity for companies to claim they have a surplus, simply by using a different measure of calculating their liabilities - and allowing them the excuse of imposing a real cut in pension payments to retirees! Companies are invited by the government to pocket the difference.

Of course they don't "have" to make this change. The link to RPI could be retained if a scheme's rules specify this, but this would not usually prevent the company from recalculating their liabilities according to the CPI measure and therefore from helping themselves out of workers' pension pots anyway!

However, since the CPI rate represents the minimum increase by law, a company can always pay more if it wants. But of course, it will not do that, unless it is pushed very hard.

While companies are wallowing in cash

Whatever we are told about the recession, it is not the case that companies are short of cash. According to recent figures non-financial companies are at present holding assets of £650 billion, because they are not investing their profits. They can either distribute this money to shareholders or use it as a speculation fund. By raiding pension funds they are able to increase this hoard even more.

As for making profits, Ford is one among many that has registered a record - the best profits since 2000, making £4.15 billion in 2010.

Then there are the banks. They are in a league of their own in every respect - both because they have carried out an incredible heist on public funds and now have the arrogance to announce huge bonuses for their executives and profits which are sky-high. HSBC just doubled its profits to £11.8bn in 2010!

And then there is the scandal of Barclays: it made £11.6bn in 2009, but paid only £113m in corporation tax, that is, 1% of its profits when it is meant to pay 28%!

All this is due to get worse. Cameron/Osborne intend to allow companies' overseas branches to pay no tax at all on repatriated profits!

So if there was already tax avoidance on a grand scale - including notoriously at Vodaphone, Topshop, BP, Barclays, etc., "we ain't seen nothin' yet!"

Will the bosses' collective robbery be stopped by isolated protests? Of course not. But these bosses could never match the united, collective fight of workers, public and private, against them. It is that fight we need to prepare for, without delay.