Amy Goodman: The Plot Against Pensions and the Plan to Save Them

[marmar]

via AlterNet:



The Plot Against Pensions and the Plan to Save Them

By Amy Goodman, Democracy Now!. Posted January 10, 2009.

Here's what the 50 million workers who saw their retirement plans drop by as much as 30 percent last year should know.


The following is a transcript from an interview from Democracy Now!

For the 50 million Americans with 401(k) retirement plans, 2008 is a year many wish they could forget. Workers saw their 401(k) plans lose between 20 and 30 percent of their value as the Dow Jones Industrial Average suffered its worst year since the Depression. Between October 2007 and 2008, more than $1 trillion worth of stock value held in 401(k)s and other defined contribution plans were wiped out. For workers nearing retirement, the losses have been devastating.

Meanwhile, several major corporations have recently announced they are suspending matching contributions to workers’ 401(k) plans due to the economic crisis. The firms include FedEx, Motorola, General Motors, Starbucks and Sears. Congress is now considering overhauling the 401(k) program.

AMY GOODMAN: Our next guest, Teresa Ghilarducci, testified before Congress recently and proposed establishing a system where workers pay into a government-managed fund that would offer a guaranteed monthly pension at retirement to supplement Social Security. Her plan has been intensely criticized by the finance industry. One columnist described her as the "Most Dangerous Woman in America.”

Teresa Ghilarducci is the director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. She is the author of the book When I’m Sixty-Four: The Plot Against Pensions and the Plan to Save Them.

Well, I am sure risking a lot here, having the most dangerous woman in America sitting next to us, but we’re willing to take the risk. Professor Ghilarducci, explain what’s happening now in light of all -- well, Obama just spoke on the economy yesterday.

TERESA GHILARDUCCI: It’s really the end of a thirty-year experiment with a do-it-yourself pension system. The United States stood above all other nations in saying, “Look, we’re going to hand over this saving and investing responsibility over to individuals. They want control. The stock market is healthy.” The finance industry told people that all you had to do was invest in the stock market, wait for a long term, implied that that long term would end at the end of your working career and you would have enough to live on for the rest of your life. And that experiment is over: it failed. And just like the Great Depression, just like the policies proposed in the Great Depression that brought us Social Security, I think we’re at that point now where we have to rethink that experiment and rethink how we get people their valentines, their pension valentines.

JUAN GONZALEZ: When you say this experiment, I mean, there was an enormous shift in terms of the percents of employees who were getting what’s called defined benefit plans, as opposed to defined contributions. How did that happen? And how big was that shift?

GHILARDUCCI: Yeah. Well, in the 1970s, we passed a law that said that if companies were going to promise a pension, they had to fund it. That was ERISA. And that was a good idea. But then, only about 50 percent of Americans, at any one point in time, had a pension. But the pension was a traditional pension called the defined benefit pension. Even though half had it at the time, it meant that as people got older, they often got into jobs with those kinds of pensions. ......(more)

The complete piece is at: http://www.alternet.org/workplace/118783/the_plot_against_pensions_and_the_plan_to_save_them/

[LiberalFighter]

1. When they say they have suspended matching contributions to 401k plans for workers

They need to be more specific.

Do they mean all employees or just management? I think they mean just management.

Why do I say that? Because as a former General Motors hourly union employee we had not received matching contributions for about 20 years.

[LiberalFighter]

2. Companies want to get rid of pension plans for their employees except board officers.

There should be a law that if employees don't receive a pension then absolutely nobody gets one including the owner or other officers. And if there is a pension plan the person(s) receiving the highest pension is not more than 20 times the lowest full-time person. Full-time being defined as 30 hours or more a week so they don't try to get around the law by making everyone part-time so the lowest full-time is someone in upper management.

[norepubsin08]

3. the lowest full time should mean

20.0 hours a week!