How the EU is demolishing pensions

We need to stand together in resisting the drive to make workers pay for the economic crisis of capitalism.

Proletarian writers

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For years, European commissioners have been putting pressure on members states to level down the pension rights of their workers, wiping out values, restricting access, raising the retirement age and leaving many of those who have no other income in poverty or forced to work until they drop as a result.

Proletarian writers

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As the struggle in France to defend workers’ retirement rights from Emmanuel Macron’s ‘reforms’ rages on, an article by Andre Crespin of the Workers Party of Belgium (PTB) usefully spells out the key role the European Union plays in putting pressure on national governments to drive up the retirement age, undermine existing pension arrangements and force workers to buy into private insurance schemes to get through their old age.

Crespin explains how unelected European commissioners, acting as the executive power of the EU, put pressure on European countries to meet their social spending by clawing back retirement rights won through many years of struggle.

He writes: “As of 2011, the commission has been pushing forward by expressing its recommendations: the ‘overprotection’ of workers with permanent contracts ought to be reduced, retirement age ought to be linked to life expectancy (ie, the retirement age should be raised), conditions of access to early retirement ought to be restricted, and complementary private pension systems ought to be set up.”

Sure enough, by 2018 the EU’s Economic and Financial Affairs Council (Ecofin) was happy to report on the demolition work already achieved and to look forward to completing the job, smugly noting that Ecofin “welcomes that in most countries, recent pension reforms have had a positive impact by containing public expenditure dynamics and contributing to an increase of average exit age from the labour market”.

Ecofin goes on to assert: “Further steps still need to be taken by member states to raise the effective retirement age, among other things by avoiding early exit from the labour market, promoting active ageing [!]; strengthening incentives to remain in the labour market; and strengthening sustainability elements in the pension system such as by linking the retirement age or pension benefits to life expectancy.”

Crespin notes that the EU is actively promoting what is known as the ‘points-based pension’: “This system, which has already been introduced in Germany, links the amount of the pension to various external factors, including life expectancy. If life expectancy increases, the pension will be lower.

“For the state, this system has the advantage of lowering the pension. Just look at what is happening in the European countries where this system is in place. In Germany, the points-based pension has been in place since the early 2000s. The balance sheet is catastrophic: one pensioner in two is getting less than €800 per month, 16.8 percent of pensioners are living below the poverty line, more than 1 million pensioners, often over 70 years of age, have to do mini-jobs in order to survive …

In Sweden, where the points-based pension has been wreaking havoc since 2001, it’s no better: 92 percent of women and 72 percent of men would have had a higher pension if the old system had remained in force. And, as in Germany, many have to go on working despite their advanced age: 38 percent of Swedes aged 67 and 25 percent of those over 69 have to keep working in order to supplement their low pension …

“This is not yet enough, though. The European Commission is lamenting the fact that only 27 percent of Europeans between 25 and 59 years of age have taken out pension savings. The European Council acknowledges that ‘the European market for individual retirement savings is currently fragmented due to the existence of a patchwork of disparate rules that hamper the emergence of a market at EU level’.”

Clearly the intended direction of travel for the EU is the effective abolition of state pensions, leaving workers to fend for themselves in a Europe-wide market of private insurance. In truth, Britain never needed much prompting from Brussels, rather leading the field when it comes to ramping up the retirement age for women and wiping out pension arrangements linked to the employee’s final salary.

But now, with Britain supposedly out of the bosses’ club, it is high time for British workers to be standing in solidarity with the workers of France against Macron’s ‘reforms’, with the workers of Germany against the appalling ‘points-based’ pension scheme, and with the workers of every country against the attempt to make the working class pay for the crisis of capitalism.

That is the real internationalism of the working class, not the parasitic ‘internationalism’ of the EU and Nato.


Read this article in French