Onerous federal laws have destroyed our pension system in the U.S. In 1975, 85% of working Americans were covered by a pension plan. It is now 33%.
Congress passed laws allowing 401(k) savings plan to SUPPLEMENT pension plans. They are twice as expensive for companies as pension plans and are a failure when they are used to REPLACE pension plans which is the ever growing trend. Only 25% of Americans age 60-62 with 401(k) plans have sufficiently funded them for their needs during retirement. 401(k) plans are woefully underfunded. As a result, baby boomers entering retirement will have to continue to work in order to maintain their life styles.
Total compensation plans, including pensions, for public sector employees are 6.8% (state) to 7.4% (local) lower than for private sector employees. The Wisconsin complaints are legitimate in this regard. But, lets not pit public-sector workers against private-sector workers. Let’s make pensions portable and able to cross the public-sector/private-sector boundary. United We Stand; Divided We Fall.
The new National Institute of Retirement Security (“NIRS”) issue brief Who Killed the Private Sector DB Plan? addresses the specific reasons for the sharp declines in private sector pension sponsorship, and offers sensible solutions to reversing the trend. This research examines the root causes behind the trend and finds that:
- Pensions are effective for employers and employees. Pensions offer employers a cost-efficient and useful workforce management tool for employee recruitment and retention. For employees, pensions help ensure adequate and predictable income in retirement.
- Despite the advantages of pensions, private sector employers have been closing and freezing their pensions due to onerous laws and regulations enacted since the 1970s, including the Pension Protection Act of 2006. These rules created complicated funding rules and increased contribution volatility when employers need steady, easy-to-estimate costs from year to year.
- Companies may not understand that employees value pension benefits. NIRS research indicates that nearly nine out of ten Americans believe all workers should have a pension to help ensure retirement security, and some 84% believe policymakers should make it easier for employers to offer pensions.
- Private-sector industry shifts have seen fewer new industries offering pensions. For example, the number of domestic manufacturing jobs with long-tenured employees has declined, while there has been a growth in information technology companies that typically have employees with shorter average tenures.
The National Institute of Retirement Security proposes Congressional pension law reforms for:
Changing pension law so that plan funding is less volatile.
Enabling employees to share the cost of pensions by allowing pre-tax contributions to the plan.
Designing pensions so that they are portable when an employee changes jobs.
Creating an avenue for third-party sponsorship of a pension plan.
Sign this petition and ask Congress to enact these sensible pension reform laws.
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