Does your worker co-operative have a pension scheme? Would you want one and what characteristics would you like it to have? I did a briefing note for one of the worker co-operative council reps on; Mondragon and what it does for its worker co-operative members.
I thought I would share this in a blog, so it doesn't languish on my computer:
When worker co-operatives were first started in Mondragon, the Spanish Government determined that their workers were self-employed. As a result workers did not qualify for unemployment insurance, social security or health care insurance. In response Mondragon created their own insurance and social security service internally (Lagun-Aro1). Retirement income for Mondragon workers is therefore comprised of a combination of dividend-like interest and principal from individual capital accounts in their respective co-operatives.
Mondragon re-invests its profits back into its worker co-operatives. In Mondragon from 30% to 50% of profits each year go into the Co-operatives indivisible reserve funds2. 10% donated to education, health and the community (mandated by Spanish Co-operative Law). The remaining profits are placed in individual members capital accounts, based on the number of hours worked and pay grade.
Lagun-Aro provides social security for co-op members, including medical insurance, sickness and invalidity benefits, and pensions. Contributions from members are in part deducted from wages, the co-op paying the rest. The staff are individual members while co-operatives are institutional members and elect representatives to its board.
As of December 2006, Lagun-Aro has: 29,858 active members, 62,173 beneficiaries (partners and children)
7,759 pensioners. Pays out: €135 million in benefits, €185 million in premiums and has €3,626 million in the Fondo Partimonal (Equity Fund) and €275 million Net Revenue (Figures here)
Funds from Lagun-Aro and the Spanish state (minimal) are combined and result in retirees being paid approximately 60% of the best 30 years of pay (adjusted for inflation) per year. A conservative estimate of mean worker pay is estimated to be $2,000 per month or $24,000 per year. Sixty percent (60%) of that pay amounts to $14,400 per year. (Figures from 2004)
2 Indivisible reserve fund: Arizmendi the founder of Mondragon learnt from historical mistakes made by early worker co-operatives (members lost control of the co-operative by selling stakes to outside investors). This is a very similar to our concept of common ownership whereby funds held in the indivisible reserve are not passed to members on the dissolution/sale of a co-operative, but to other co-operatives. This fund also provides much needed liquid capital.
Info mainly from:
CWNF: The Worker Co-operative Movements in Italy, Mondragon and France
Mondragon Co-operatives, by Manfred Davidmann
1956-2008 The MONDRAGON Co-operative Experiencie
US visit to Mondragon Blog
Wealth at Work: Employee Ownership and Responsible Accumulation
What options do we have in the UK?
If you know of any good ethical, co-operative pension solutions for worker co-operatives do share.
the Co-operative has what looks like a standard company pensions scheme.
Also spoke to a new pension trust aimed and SME businesses that had a stand at Co-operatives 2010