How do pensions work exactly?
Feb 10 2006 14:34
Right so obviously pensions are a big deal now, and will continue to be moreso. My work will probably be striking over pensions if the big one goes ahead:
http://libcom.org/news/article.php?story=public-sector-pensions-strike-240106
But how do pension schemes actually work, and fit into the big scheme of things?
Lots of people are saying that workers now can't afford to support the older people. As I understand it though, older people have already funded their own pensions out of NI contributions their whole lives, right?
Also, workers' pensions schemes collectively are probably the largest capitalist in the world, is that right? Or near there anyway.
So basically this money - which is effectively part of workers' wages, get invested (with govt. assistance) in pension funds, which then invest in - in means of production. The fund then grows off the exploitation of other workers. This correct?
The whole pensions thing is very insidious, a good example of the myth the "evil capitalist" or even capitalist class, as opposed to the institution of capital.
Any big issues I've missed here? More info, useful stats or links anyone?
Feb 10 2006 15:00
#2
Hi
Quote:
Lots of people are saying that workers now can't afford to support the older people. As I understand it though, older people have already funded their own pensions out of NI contributions their whole lives, right?
The NI contributions haven’t built up enough capital to support the pension as well as anticipated. It’s a gigantic miscalculation based on pre-monetarist conceptions of how to manage the money supply. The current economic argument says that if we print enough money to satisfy pension requirements without belt-tightening in other quarters, we’ll get inflation. Something you and I know to be a “trick”.
Quote:
Also, workers' pensions schemes collectively are probably the largest capitalist in the world, is that right? Or near there anyway.
That’s were most shares are held by institutional investors. It ties all our futures into stock market performance. Can’t say it fills me with confidence. Final salary pensions are a problem because some way will need to be found to make up the shortfall between the value of the stocks and the size of pension they are meant to buy.
Quote:
So basically this money - which is effectively part of workers' wages, get invested (with govt. assistance) in pension funds, which then invest in - in means of production. The fund then grows off the exploitation of other workers. This correct?
It certainly grows from their product.
Quote:
Any big issues I've missed here? More info, useful stats or links anyone
The pensions crisis is part of capitalism’s decadence, specifically deindustrialisation and “fictitious capital” a la Goldner. If you want to create wealth to support retirees, then we’d better start making something useful rather than paying ourselves to hold doors open for each other.
I propose a large citizens income, say 50% of the per capita GDP, to replace benefits, pensions, tax credits and to supplement “wages”. Non repayable, non-means tested, dished out whether you’re available to work or not. Anything you make on top of that in the open market, fair enough.
Totally unaffordable for the bourgeoisie, totally necessary to eliminate working class poverty.
Love
LR
Feb 10 2006 15:31
#3
system:
Workers pay 6% of their wages for the duration of their working lives into the public sector pension pot. This goes not into a specific account but into the general budget. The government then match the money, making for a 12% total.
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 this case you get the same 50/50 split, but 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 a board of directors, usually drawn from senior execs on the company.
As far as i'm aware.
Feb 10 2006 15:36
#4
NB// If you've been reading the regular Freedom briefings you should be well up on this 
.
Feb 10 2006 18:28
#5
Yeah if they'd set up the state pension so you pay into your own fund, then people would have started claiming 10 or 20 years after it was brought in. As it was, I'm sure they immediately paid out to people over pensionable age, out of the contributions of people still working and paying NI contributions.
Feb 10 2006 20:58
#6
There's also a difference between a fund and personal pension.
If it's part of a fund then it is held with lots of other people's money. The idea is that the fund keeps getting bigger and bigger because money keeps flowing into it, and the capital remains in the pot even when you die and don't need to be paid. Problem with this is that: fund managers are paid large salaries if stocks don't go up and huge bonuses if they do. Companies have been scrimping on contributions, because the stock market went up so much they didn't pay in as the funds had enough money, on paper, already, now they threaten to go bankrupt if they are asked to make up the shortfall (similar to the previous problem)
You can have a personal pension that is invested in a similar way, but your share of the pot is separated. This is pointless, it is only your money that goes in so the amount you need to save is far too high, and plus it goes to the treasury when you die. You'd do better to save up some cash and be disciplined about not raiding it when you're skint.
Feb 18 2006 14:10
#7
Hi
One advantage of private pensions is that you can now take benefits when you’re 55. Trouble is, for me anyway, it’ll only be worth about £3500 per year so all it will do is eat into my benefits.
Can public sector final salary pensions be funded without hammering working class people for more tax? (Either through longer hours or lower take-home pay) I don’t think so.
To retain their “lavish” benefits, public sector types are going to have to fight a major propaganda battle at some point and propose a better way that doesn’t disadvantage the rest of the working class. You can be sure that the government will play this card at some point, and whatever the public sector folks do, they’ll need to break out of the same tired leftist treadmill that always leads to division and defeat.
Does anybody think that industrial action, along the lines of that employed just prior to Maggie’s 1979 election victory, represents the way forward?
If we want working class economic security, both during our “productive” lives and upon retirement, then we need a high basic citizen’s income and the wealth generating industrial capacity to fund it.
Recent gas price hikes illustrate the need to get control of our primary economic base as a prerequisite to improving working class living standards in, what we can only hope are, capitalism’s end days.
Love
LR
Feb 18 2006 15:42
#8
the state should provide everyone with a livable pension , they expect you the individual to be an upstanding citizen and work to improve the country the least they could do is provide a pension at the end of it, plus imho once you retire if you rent council housing the rent should be free, no council tax for pensioners, free travel for pensioners, but instead of trying to make things better for pensioners all the government want to offer them is the chance to work longer and to increase the pension age.
Private pensions can be good if its a works pension that you have contributed into for many years , but as to paying a monthly amount to sun life etc etc, all fucking shysters how many people have been fucked over by these companies, i have had to deal with a few people coming in who have been shafted big time by these companies , all part of the capitalist plan to grind people down and have em on their knees.
Feb 18 2006 15:51
#9
Hi
Quote:
the state should provide everyone with a livable pension
Comrade! There’s no point appealing to the state, the legislative apparatus of the bourgeoisie, for anything. They neither have the will, nor the resources, to provide what you’re asking for.
Only the working class, the source of all wealth, can provide itself with the economic security you allude to.
Love
LR
Feb 18 2006 15:54
#10
your right I spose LR , but as your nearing that time of life I was just thinking of you and would hate to see you struggling with no state pension 
Feb 18 2006 16:33
#11
Hi
Ho ho. Well thanks for that.
Unlike most of my less financially less astute colleagues, I did not contract out of SERPs when my AT&T final salary pension was replaced with a Norwich Union personal pension in the early nineties.
My last pension forecast suggested that I can expect to enjoy a state pension of about £8000 (today’s prices) a year when I retire. Many of my ex-work mates have been in receipt of those letters suggesting that they should buy themselves back into SERPs at considerable expense. Their personal pensions look likely to provide them with less money than the state pension, if they had continued to contribute to it.
Our income security has been under constant erosion, whilst we’ve never had it so good. The Society of the Spectacle. There is an underlying economic crisis reflected in the bourgeoisie’s tight fisted control of the money supply.
The "solution" is our autonomous marshalling of wealth creating industry and a money supply model that guarantees our economic security and every-day liberty.
Love
LR
Feb 18 2006 17:38
#12
As regards pensions, i think im pretty fucked, took out a private pension 15 years ago and opted for serps to be paid into it, made contributions towards it for 1 yearv and not since and as ive probably worked about 8 years out of the last 15 wont be much serps going into it, and now its a case of the wife works and I do the house hubby thing and voluntary work, no serps going into it, so it might be worth about 20p a week when i retire, but I dont really give a fuck being old and creaky doesnt appeal too much.
Feb 18 2006 20:13
#13
Lazy, it seems like you're a little older than I thought.
I have a few questions, I've had money taken from me for the work pension scheme. I'm not going to stay there for long. Would I do better to take the money out and stash it somewhere else or leave it in there until I get a pension (assuming I do, I'm not sure it'll be worth it)
Feb 18 2006 20:38
#14
Hi
Quote:
Lazy, it seems like you're a little older than I thought.
I'm under 40.
Quote:
I've had money taken from me for the work pension scheme. I'm not going to stay there for long.
If it’s a personal pension then take it with you when you go, I strongly recommend saving long term money in pension funds and tracking ISAs and retiring as young as you can to live a simple life of modest whimsy.
Love
LR
Feb 18 2006 20:56
#15
now i feel ancient, im 41
Feb 18 2006 23:14
#16
A big candidate for a bit of working class uprising, i feel. For one thing, given that people who are 50 now are looking at having another 5 years tacked on to their working lives; and given that I'm only 20; I calculate that I'll be able to retire around 16 years and 4 months after I die. My generation will not be able to ignore this crisis for long, and they'll probably realise that they're likely to be contending with something far worse by the time they're 50.
Furthermore, this whole pensions snafu appears in many ways to be a handy little microcosm of how capitalism exploits everybody and how lousy our governments are at thinking ahead. If people start asking that little question 'so how do pensions work anyway?', then sooner or later people might notice the paper clips and chewing gum holding the entire global economy together. More likely, though, capitalism will fall apart of its own accord and the whole issue won't matter anymore.
Incidentally, if everyone does have to work another 5 or so years, won't that artificially inflate the workforce really quickly and play merry hell with the economy and the labour market?
Feb 19 2006 05:06
#17
Lazy Riser wrote:
I'm under 40.
Quote:
I've had money taken from me for the work pension scheme. I'm not going to stay there for long.If it’s a personal pension then take it with you when you go, I strongly recommend saving long term money in pension funds and tracking ISAs and retiring as young as you can to live a simple life of modest whimsy.
I thought you were in your thirties, but you seem to be well pensioned up already.
Is it worth saving to a pension? Youget tax relief but pension funds are unreliable and as they pay you out of the interest and keep your money when you die isn't it better to save and live off the interest?
I am trying to save money now, hopefully my ISA will get me some decent interest.
Mar 20 2006 11:03
#18
I long for a pension that can be squandered and mismanaged
*sigh*
Sadly no. 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 when the british bourgeoisie set up the welfare state. I think American system functions somewhat differently though.
This is partially the case for private pensions although state pensions are different as I already mentioned. However, it's important to point out that, in fact, 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 accumulution. (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 and trillions of dollars from these funds which cannot now meet their obligations. Even if the stock market recovers (in some ways it has), the bourgeoisie 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.
An excellent point. But far more important is the way that this issue has a far greater potential to radicalise the working class than previous ones. This is because it is hitting all workers, young and old, male and female, of all nationalities, races and creeds in the most profound and visible way.