Pension Guide

Citizen Retirement Senior

Pensions: One Hand in the Till

Handing over your underfunded pension plan to a financial institution may cripple the plan's tax benefit.

Act Pension Protection Feature Article by Solomon Hughes, September 2002

Pension A lifetime monthly income paid to a person who has retired. Pension Benefit Guaranty Corporation (PBGC) In the United States, the organization that insures benefits in defined benefit pension plans. Its purpose is to make sure that all participants in qualified defined benefit pension plans receive the vested benefits to which they are entitled, even if their pension fund goes bankrupt. Per Capita Beneficiary Designation

Home Retirement Pensions--once the bedrock of the welfare state--are under attack as never before. Solomon Hughes explains why this is connected to the spread of global capital.

It appears that the legislative logjam found in Washington this year has partially broken through. The House of Representatives and the Senate recently passed the Pension Protection Act of 2006 (Pension Act), an extremely comprehensive pension reform measure. In fact, House Majority Leader John Boehner ( Ohio) refers to the new legislation as "the most sweeping overhaul to U.S. pension laws in more than 30 years."

Old Age Pension Pensions have leapt from the personal finance supplements to the front page. Last month the 'Daily Mail' argued that government should 'end this pensions disgrace' by cracking down on management 'pension wreckers'. The 'Mail' declared, 'It is outrageous that loyal, prudent workers should be bilked out of their pension' as 'cynical employers' walk away from their obligations, closing schemes while enjoying their own 'generous pensions'. Not only did this arch Tory newspaper call for legal restraint on the employers, it also called for a 'government safety net' for pensioners. When the 'Mail' turns on big business, it is obvious that government and employer plans to hack away at pensions are generating real and widespread anger. Happily, the biggest (and best) analysis of the pensions crisis now available comes from the left, thanks to Robin Blackburn's book.

If you are eligible to contribute to a personal pension or stakeholder scheme (other than one simply used for contracting out of part of the state pension scheme), linked term insurance. With a personal pension, 1, you can pay up to 5% of your 'net relevant earnings' (basically, employed) linked term insurance. You can do this even if you are not actually making contributions towards your pension.

Community Florida Retirement

Peter O'Sullivan, director of Tenon, encouraged SMEs to explore the opportunities that the Pensions Simplification would bring. "The introduction of Pensions Simplification in April 2006 will give SMEs greater control to manage their pension portfolios, and give them the freedom to choose from a greater range of investments, " he explained. Mr O'Sullivan stressed that the new legislation could create some complications for businesses and advised firms to seek advice from pensions experts.

Pension Annuity Blackburn looks at how economic security for the old is one of the left's oldest demands, yet pension provision has become central to capitalism. He shows how the battle over the pensions pot has boiled into social explosions, and offers his own proposal for structural reform. He reminds us that pensions are literally a revolutionary demand. Tom Paine, the intellectual driving force of the American Revolution, planned a pension of 6 a year, paid for from progressive taxation. During the French Revolution, Condorcet proposed a collective old age insurance, based on sound mathematical principles, using the new 'tables of general mortality' which now underlie most pension arrangements. The plan advanced, and in the new calendar 10 Fructidor became the 'Festival of the Old'. When the revolutionary tide ebbed the schemes and festival were abandoned. However, even when reactionary regimes like imperial Germany later introduced pensions, they did so under the pressure of radical or revolutionary challenges. Bismarck, Germany's 'iron chancellor', introduced pensions to fend off challenges to the state. He argued that 'anybody who has before him the prospect of a pension, be it ever so small, in old age and infirmity is much happier and more contented in his lot, much more tractable and easy to manage'. Ironically, it is our own supposedly socialist 'iron chancellor' Gordon Brown who plans New Labour's pension attack, carried out at the request of the World Bank.

Active Community Retirement

State Pension The current attack on pensions is based on the terrible news that people are living longer. Because workers in the developed world are refusing to die a few years after retirement, the money men worry they will linger around and be a drain on the state and employers. Again Blackburn reminds us of the vintage of this reactionary tirade--gloomy vicar Thomas Malthus argued against all forms of social welfare in the 19th century, claiming that if reform removed the 'killing frost of misery', the non-working population would increase to the point where society collapsed. Malthus, like the World Bank, argued against 'universalism', proposing individual 'savings banks' to encourage thrift. In a Malthusian spirit, our own Labour government refuses universalism and won't let pensions rise with earnings. Instead an individual, 'thrifty', but second rate 'stakeholder' pension is offered.

Calculator Planning Retirement

Military Pension Modern day Malthusians like EU president Romano Prodi claim that 'fewer people are working to pay for more retirees', leading to inevitable breakdown. However, Malthus's predictions were wrong in the 19th century, and Prodi's are wrong in the 21st. Raising labour productivity--and immigration--can easily help support the retired. In fairness to Prodi, he does occasionally punctuate long speeches about the dangers of asylum-seeking hordes and the need for border crackdowns with an acknowledgement that Europe needs more immigrants, not fewer. Any feeling that there is not enough money around to support older citizens is soon dispelled by examining the pension arrangements of Britain's chief executives.

401k Plan Retirement

Old Age Pension Canada Treasure chest

Gift Retirement

Pension Funds The current wave of attacks on pensions stems from a 1994 World Bank report which actually has nothing to do with concern about the retired. While the World Bank is always enthusiastic about slashing and burning through social security, when it came to pensions the bankers wanted to do more than just cut costs. They were fantastically envious of the massive treasure chest which workers had prudently built up for retirement. Working people had persuaded governments and employers to join with them in pension schemes, which were now worth billions. The World Bank wanted to snatch this money to fritter it away on mad Enron-style schemes or to fund privatisations in the former Soviet Bloc and developing world. The World Bank recommended that workers should be forced to build up funds in individual schemes based on the stockmarket, and collective government or employer schemes should be abandoned. Pensions should not guarantee payments, but instead be as secure as a national lottery ticket--the point isn't to fund retirement, it is to fund capitalism.

Online Prudential Com

John Hancock Pension Here is where the jargon comes in. Pensions can be pay as you go (Paygo) or pre-funded. Under Paygo schemes the workers make payments to fund today's pensioners. When they retire they will be supported by the next generation of workers. Many state pension schemes are Paygo, expressing what is called 'intergenerational solidarity'. Many private schemes--including occupational pensions--are pre-funded. The workforce pays into a big account, from which it draws upon retirement. This fund is meanwhile invested in shares, bonds and the like. The bankers love these funds. These schemes can be 'defined benefit', where employees receive a set pension, probably based on salary. They can also be 'defined contribution', whereby the retired get payments based on what is left in the pot after the bankers have gambled the cash as they see fit. Ideally the money men want to be able to gamble the pension fund, without being responsible for a fixed pension payment. They want the rich to get the pleasure of investing, while the poor can take the blame when the cash is wasted. The World Bank recommends 'mandatory, privately managed and fully pre-funded pension schemes'. 'Defined contribution' is preferred to 'defined benefit'. They don't like collective 'occupational schemes'--even payroll-deducted schemes should be private and personal.

Poem Retirement

Ing Retirement Blackburn makes a good job of seeing through the financial fog surrounding pensions, and illuminating their real meaning. As with so many things under capitalism, the workers are pelted with the rotten fruits of their own labour or, as Blackburn shows, 'at present the pension funds are integral to the globalised economy which decrees that shopping malls and shiny office blocks will proliferate while parks, swimming pools, libraries and theatres open to all will not, that some regions will boom and others decay, that commercial gain will displace the ethos of public service, that the poorest will have to tighten their belts if economic "adjustment" is required, that natural resources accumulated over millennia will be consumed in a few short years, and that the abundance of oceans will be poisoned and destroyed.'

Widow Pension

Income Retirement Blackburn's own suggestion of reform is that there should be a public, pre-funded pension. The fund should be supervised by a worthy board, who could invest in useful works like houses or hospitals. Right now 'the boring world of pension provision now fuels the glamorous world of high finance, property speculation, rogue traders, media and technology mergers and stock exchange bubbles'. Under Blackburn's proposal pension provision could fund buildings, not bubbles. He admires the Singaporean 'Central Provident Fund'--a 'gyroscope' and 'a sort of a buffer' for their economy. The fund builds cheap housing. He is also drawn to Chile's 'AFP' funds, and likes Japan's system.

Pension Fund

Account Individual Retirement While this reform is not unreasonable, it looks suspiciously like a mirror of the World Bank proposals. The bankers want the pension funds to pay for bad works, like Enron. Blackburn wants the pension to pay for good works, like hospitals. However, to fight the battle, I think it is better to focus on the needs of the retired. We should defend the pension schemes we have, and fight to extend the national pension, rather than focusing on constructing a complex structure of boards and funds. Blackburn's plan leads him to be far more sympathetic to Frank Field's pension schemes, when the battle to restore the earnings link to state pensions was more important in the labour movement.

Pension Investment

Living Retirement Social explosion

Canadian Pension Plan

Prudential Retirement These criticisms aside, we need ammunition to fight the World Bank driven attack on pensions. We could simply hurl Blackburn's book at treasury officials--at 550 pages it is heavy enough to at least stun, if not actually kill. Over its pages, he shows the meaning of pensions over 200 years and at least four continents. His book is not just an academic tome, but it isn't a piece of popular propaganda either.

Department For Work And

Calculator Retirement Savings Best of all, Blackburn reminds us that social explosions surround the pensions battle. He quotes Institutional Investor magazine to show the 'stalled promise of European pension reform'. The managers' mag moaned that 'money managers have stormed the continent, but so far they are fighting over scraps'. Firms like Goldman Sachs, Morgan Stanley, JP Morgan, Invesco and Merrill Lynch set up HQs to grab the pension cash, but a series of working class battles mean the money has yet to be handed over.

Ibm Pension

Retirement Speech So when the Spanish government had sought in 1988 to cut pension entitlements it sparked off a general strike. In France Alain Jupp's government attacked public sector pensions. Jupp tried transferring pensions from the 'caisses', with their trade union nominated staff, to the government. This, combined with attacks on rail workers, led to public sector strikes in 1995, paralysing France and halting 'reform'.

Pension Benefit Guaranty

Account Retirement Berlusconi's bleakest moment came nine months after he assembled his coalition in 1995. 'Italian trade unions rallied to the defence of the earnings link' for pensions, 'with hundreds of thousands taking to the streets in the largest demonstrations seen for 20 years'--the link was preserved. In Germany Kohl was forced to promise that 'a government led by the SPD will ensure that the so called "generation contract" between the older and the younger generations remains in force'.

Pension Calculator

401k Retirement Desperately, the bankers demand tax breaks to make their products 'exciting'. Morgan Stanley director Alan Rubinstein said of Italian personal pensions, 'The new system needs to be made obligatory.' This free marketeer wants the state to make his product mandatory.

Government Pension

Investment Retirement The pensions battle is now brewing in Britain. As I write, steel workers in Caparo, a firm owned by Labour's Lord Paul, are striking to defend their collective workplace pension. Lord Paul told his employees via a small announcement on the noticeboard that they would be switched to individual 'stakeholder pensions'--schemes set up by the Labour government on the World Bank model. The battle lines are drawn, and thankfully we have Blackburn on our side.

[ Comment, Edit or Article Submission ]