Skip to comments.Where Did All Our Pensions Go?(A Children's Story;)
Posted on 10/08/2012 4:09:27 PM PDT by mdittmar
A total of 84,350 pension plans have vanished since 1985. This figure shocked Pulitzer Prize-winning authors Donald L. Barlett and James W. teele, who just released their latest book, "The Betrayal of the American Dream." Their chapter on retirement chronicles the heist of the American dream's secure retirement by the financial elite and is a very important section of the book, says Steele, who spoke with the AFL-CIO about the retirement crisis. Steele says there is another number we should pay attention to: $17,686. That's the median value of 401(k) accounts in 2011. For most working people, the amount in their 401(k) account would pay them less than $80 a month for life.
"What's happening with retirement is almost parallel to what you see happening in other parts of the economy," says Steele.
The elite has its agenda to eliminate pensions with the shift to 401(k)s, which cost companies less. Now, there's a revenue stream for Wall Street and an obligation shift to people with little or no experience understanding how to deal with their own retirement issues....This is typical of all the other things the economy elite has been doing for decades with deregulation, unrestricted free trade and tax cutsthese things are all related.
"In the '50s, '60s and '70s, the amount of workers with access to pensions was significantly rising," says Steele. "We fully underestimated the speed in which the downturn would occu, and how Congress went along and encouraged it."
Barlett and Steele write that the shift from defined-benefit pension plans to 401(k)s began in the 1980s. Companies realized 401(k)s would substantially reduce corporate costs. Workers were told that pensions no longer made sense and were outdated since people moved around from job to job. The 401(k) was marketed as more portable.
Steele says 401(k)s were engineered by corporations as another way for the wealthy executives to set aside money. They were never intended to be a principal retirement plan, only a supplement.
"Once corporate America got on to this, the idea took root," says Steele. "The entire obligation shifted to the employees."
Congress ignored the concerns raised by trade unions and other pension rights organizations. And the consequences are dire for middle- and lower-income workers.
"This is so typical of what has been happening over the last two to three decades," says Steele. "This is the slow, steady erosion of economic security Americans had (or thought they had)....Now economic pundits, corporate folks and Wall Street people are saying people just have to work longer, in part because retirement plans now in place will not provide much security to people as they get older."
Barlett and Steele feature stories of average people who did everything right (saved, worked hard) but are still living on the edge of poverty because of policies that enhance the rich at the expense of everyone else.
Over and over again, people thought they had something good. They were working hard and then, through no fault of their own, lost it all. Most people we talked to in the book are employed.
People thought it was something they had done to lose their job or benefits....They didnt realize it was part of a broader pattern. There are great swaths of working people who are affected and we think it's our fault. For most of these people, it's not their fault, it's just the way policy has been organized. Systematically dismantling pensions and retirement is the perfect example.
With the decline of pensions, it's even more important to strengthen, not cut, Social Security benefits. Although the country dodged a bullet in 2005, when Bush's plan for Social Security privatization fizzled, Steele says we still need to be vigilant to protect our benefits from the Wall Street casino.
Don and I make this point that the 2008 recession wouldn't look a whole lot different from the Great Depression if we didn't have Social Security and Medicare because there was no safety net then.
The economic elite, says Steele, attack Social Security because it's a large pool of money for Wall Street to play with.
Nobody should kid themselves that they're not going to come back and try to implement some parts of that [privatization]....The amount of money at stake is too good and thats all they care aboutaccess to that money, not American workers.
You can purchase "The Betrayal of the American Dream," on Amazon.com and Barnesandnoble.com.
A certain man had the good fortune to possess a goose that laid him a Golden Egg every day. But dissatisfied with so slow an income, and thinking to seize the whole treasure at once, he killed the Goose; and cutting her open, found her just what any other goose would be!
Aesop's Fables,Timeless stories with a moral.
They went back where they came from, the world of fairy tale math.
The same world where “retirement” has always existed throughout human history.
I've never been a member of a union,never will be.
The political elite didn't let Wall Street play with this money, because they wanted to spend it themselves. Now we have unfunded SocSec liabilities of over $10 trillion and no pile of stocks and bonds to pay the benefits.
Pensions suffered from poor timing, coming into existence as life expectancy rose. Paying in for 30 years and then living five more in retirement was a reasonable and financially feasible model. Working 30 years (25-55) and living 30 more (55-85) was not feasible.
Pensions went bankrupt when unions demanded more in benefits in retirement than workers every contributed, early retirement in luxury and free medical care.
our 401k plan was just for salaried personnel. We tried to include the union during negotiations but they wanted no part of it. Many of the individual union members wanted it, but their leadership nixed it.
What say we ask the non-union employees of Delphi where they went? I think they might be able to shed some light on the subject.
The sooner those plans the Federal Government uses for their retirement is gone the better for us!
My Dad, President of a union, was a union man all his life,use to tell me people we're to stupid to take care of themselves.These would be the same (stupid) people your dad represented...Or were they somehow special?
The Death Panels are the unspoken fix for Soc Sec.
Slice 10 yrs off the life expectancy and the numbers magically improve.
First of all that plan described in employee handbooks was not really a guarantee. Any time a company got into trouble that pension plan could be changed or terminated.
Corporate Raiders purchased companies and stripped the money in these plans to pay back the loans that they incurred to pay for the company.
Likewise anytime a company went bankrupt, the pension fund was often lost, and employees were back to square one.
I know people in the banking and financial industry that lost their pensions, and were close enough to retirement age that all they have left is social security and the money they saved in their 401k. That defined benefit plan was gone - poof overnight.
Defined benefit plans were not providing for the needs of employees in that scenario. Everything is not always just due to FAT CAT WALLSTREET types trying to screw the little guy, and don't ignore the role of government trying to help.
Government rules requiring more current day funding to shrink the amount of unfunded liabilities(recognized as an expense and having a negative impact on current profits)also played a part in the demise of defined benefit plans.
401 k plans are far from ideal, but at least the employees contribution and earnings do not become fodder for creditors when a company goes bankrupt.
It allowed payroll deduction of 6% and the company would match it each year between 50-100% depending on the performance of the company. In a few years they also allowed you to deduct another 7% but there was no match to it.
Those on pension remained on pension with the 401k a supplemental, or visa versa. In good times the 401k was a better plan than the pension.
the union leadership were fools for not taking from the company what essentially was free money.
401k plans don’t necessarily cost less than defined benefit pension plans. The cost is a lot more predictable, though.
Employees liked 401k plans better, even if they provided lower benefits.
The biggest culprit in the decline of pension plans is the federal government. They lowered the limit on the pension amount payable. This removed the executive’s incentive to have the plan in the first place.
They introduced an excise tax on overfunded plans. No one wanted to overfund their plan. You couldn’t take the excess out while the plan was in operation, and you couldn’t terminate the plan without getting hit with the excise tax.
This led to many plans being underfunded. The feds had to fix that, too. New rules forced the underfunding to be paid for more quickly, and with more variability. Underfunded plans now had to pay a premium to the government insurer.