Press Release: Pension Poverty Time Tomb

People Before Profit Press Release - Aug 18th 2016

n August, a paper entitled “Inter-Governmental Group on Fuller Working Lives” appeared. It was an irrelevant document that did nothing to tackle the growing threat of poverty for older people.

The numbers aged 65 and over is estimated to increase from 570,000 in 2013 to 855,000 in 2026. But the government has already raided the National Pension Reserve Fund that was designated to pay for these growing numbers.

Workers contributed to this fund but it was literally stolen. There was €22 billion in it when the Celtic Tiger crashed but about €17 billion was used to bail out the banks. The rest was used to set up an Irish Strategic Investment Fund which has become a means of funnelling cheap credit to business people.

This fund, for example, could be used to build social housing and the rents that accrued could pay the pensions of future generations.

But instead the Irish Strategic Investment Fund will only invest in ‘projects of a commercial nature’. That is code for involving private capitalists.

Result: there are growing numbers looking for a state pension but their money has already been squandered.

This is why part time workers risk losing their contributory pension unless they have worked more than 8 hours per week.

Defined contributions but uncertain returns

The other major problem stems from the current madness that has overtaken global capitalism

The system is facing unprecedented stagnation as can be seen in the near decade long economic crisis. Capitalists have responded by cutting back on their investments because they don’t think they will make enough profit in these fearful times.

This has led to a strategy of negative interest rates and quantitative easing. To encourage corporations to start investing, central banks are printing money and, instead of offering interest to large depositors, they are actually charging savers for holding money. The theory is that these negative incentives should encourage capital to spend on production. But in reality, it has had a different effect.

The wealthy are engaged in another orgy of speculation, through hedge funds and ‘special purchase vehicles’ set up dodge tax. They are buying up distressed property and ‘food commodities’ in the hope of making a quick buck.

Now here is the rub. Over the last decade many workers have been forced into private pension funds or Defined Contribution schemes which put money into investment portfolios where they face the risks of market fluctuations.

In the past these private pensions often invested in government bonds or safe havens such as banks – where they gained steady interest. But as both of these now give a declining return, they either move into more speculative activities or cut back on pension pay-outs. The overall result is more poverty and more insecurity for the aged. We need to change this.

People Before Profit believe,

Employees should be offered a defined benefit system to increase their security.
Employers should be legally forced to contribute to the pension funds of their workers.
The private pension industry should be replaced with a public programme that invests in useful social projects that gives a return to future generations.
The money taken out of the National Pension Reserve Fund must be put back through a special levy on bankers and property developers who are once again rearing their ugly heads.