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Stealing your pension
April 13, 2014 - Harry Eagar
The New York Times has an interesting (but since it's in the Dealbook section, short on details) story about how your pension is going to be stolen.
I can remember when Incurious George suggested we should do away with the customary (customary since the New Deal, that is) pension arrangements and just buy stocks. Although Americans are not nearly suspicious enough of rightwing tax schemes, they maintain a solid skepticism about Wall Street, and they weren't having any of it.
(I also recall that when I spoke out against Bush's crazy scheme, I was called many unpleasant names. It is pleasant to look back now and know I was right all along.)
The Bush Crash probably stymied another attempt to place your pension balances in the hands of Wall Street for some years to come, but the Bush Crash did destroy the so-called pool system by which some smaller employers sought some diversification of risk.
You will not be surprised to learn that a sufficiently complex system is being gamed.
"Today, however, the aging of the work force, the decline of unions, deregulation and two big stock crashes have taken a grievous toll on multiemployer pensions, which cover 10 million Americans. Dozens of multiemployer plans have already failed, and some giant ones are teetering — including, notably, the Teamsters’ Central States pension plan, with more than 400,000 members.
"In February, the Congressional Budget Office projected that the federal multiemployer insurer would run out of money in seven years, which would leave retirees in failed plans with nothing.
“ 'Unless Congress acts — and acts very soon — many plans will fail, more than one million people will lose their pensions, and thousands of small businesses will be handed bills they can’t pay,' said Joshua Gotbaum, executive director of the Pension Benefit Guaranty Corporation, the federal insurer that pays benefits to people whose company pension plans fail."
I am so old that I wrote about the passage of the Employee Retirement Income Security Act when it was new in 1974. The Times does not say why that law was passed, but I recall: Employers were looting pension plans and there was not much the victims could do about it.
One of the attractive features of ERISA was that it made employers personally liable for pension shortfalls. So far as I know, that has never been applied. Too bad. That would be involuntary income redistribution that even a rightwinger could -- supposing they really believe their on speeches -- be for.
An honest day's pay for an honest day's work, right?
Don't count on it.
Now I am retired, I get a lot of solicitations starting from the premise that a retiree requires at least $500,000 principal. Not so easy for workers to acquire when they make $30,000 a year. Times 40 years that's $1,200,000.
Unless the worker lives in a tent to economize on rent, $500,000 ain't gonna happen. The Republican Party is the party of low wages, so the more Republicans get elected, the fewer people will be able to look forward to eatin' reg'lar in retirement.
RtO has a partial solution: Tax capital and labor the same.
There are other simple, equitable policies, but tax filing day is coming up and the thought for today is: Eliminate the tax preference for capital gains. Let capitalists pay tax at the same rate as waitresses.
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