UNISONActive is an unofficial blog produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective.

Monday, 21 March 2011

The City & Wall Street plunder pension funds from West Midlands to Wisconsin

Everyone knows by now that the attack on public sector trade unionism in the West has its epicentre in Wisconsin. Backed by the wealthy elite the State Governor has launched an attack that seeks to destroy the resistance of workers, their unions and their communities.

Wisconsin Gov. Scott Walker (R) has painted a dire picture of his state's pension obligations and the apparent pension fund's lack of sustainability as grounds for his plan to revoke collective bargaining rights for state employees but that proposal has sparked outrage among state employees and drawn tens of thousands of protesters to the state's capitol.

The same line of attack is being prepared by the Con Dem's who have cited the same issues pf public sector pensions sustainability as the battle ground for their real ambition of removing trade unions as an effective force aganist their austerity programme.

The Con Dem's want us to pay more, work longer and get less...in Wisconsin Walker says "We're going to ask our state and local workers ... to pay a little bit more, to sacrifice, to help to balance this budget," adding that he would be forced to lay off 5,000 to 6,000 state employees if his budget plan was not approved.

But like the Local Government Pension Funds the Wisconsin pension fund is simply not in funding trouble. So while Wisconsin does face a $137 million budget shortfall this year, the source of that fiscal trouble is not the state's pension fund. Under the current plan, Walker hopes to generate $30 million this year by raising taxes on public employees - the governor refers to this as increasing the "contribution" that state employees make to their pension funds.

In the UK Osborne wants us to pay 50%, or more, in contributions to pay back the debts the Labour government raised to pay off the collapsed banks debts; and the increasing government debt that has resulted from the recession.

According to the Wisconsin pension fund's 2010 report, the fund spends about 84 percent of its management costs on outside help -- highly-compensated fund managers who work for private-sector financial firms. While Wisconsin has made a concerted effort to bring more of its fund management in-house, it could do more:


In 2009, roughly half of the pension fund's total assets were managed by state employees, who were paid a total of $28.4 million for their work. By contrast, outside Wall Street professionals were paid $194.7 million, a 6-1 difference, to manage the other half of the fund's assets. Cutting Wall Street pay, or simply moving more fund management in-house, could easily generate the $30 million in new taxes Walker wants to assess on state employees.

In the UK £127bn of the £135bn in LGPS assets, our assets, are managed by the same Wall Street firms and others in the City of London, like Goldman Sachs and Fidelity Asset Management. Fidelity are a consistent donor to the Tory Party:


They have all been charging us similar amounts of money as well.

The national union submitted a report to the Hutton Commission that demonstrated a massive £1.2bn increase in income a year, year on year, could be made by bringing these fund management contracts in-house and merging the funds.

Osborne wants £1bn from our pockets in increased contribution rates, he wants to go to war on our union rights and our pensions.

We have a plan and a demand to make our pension funds work on our behalf and not on the behalf of Osborne's funders in the City and Walker's funders on Wall Street.

We must demand the government merge the LGPS funds and bring the our money management contracts in-house creating hundreds of public sector jobs, saving us £millions of pounds and finding the cash to improve benefits not increasing contributions!

Raise these issues with your members and in your branches.