When Did Pension Become a Bad Word?

The United States of America is the greatest country on earth, but unfortunately it is not perfect. Our economy is falling short of what it is purported to be doing: making a well-paying job for everybody who wants a job.
To generate careers, we require a stop to bad trade deals, better regulation of this financial industry and fairer rules for unions to organize workers. We also need to fix our pension system.
Pensions have become a bad word lately, probably because less people have them. Some workers don’t even understand what pensions are. Pensions are fundamentally annuities for individuals who contribute to them, either by deferring some of their wages or paying directly into the fund. They’re called “defined benefit plans” because pensions offer a specified monthly amount to recipients. Pension funds are managed by investment professionals who are purported to know very well what they’re doing.
Our country’s private pension system is gradually being dismantled. With 401(k) plans, businesses have shifted responsibility for retirement planning to their employees. Many 401(k) plans are ravaged by high hidden fees and market downtu
s. I am conce
ed that millions of baby boomers will retire in the coming years and find their 401(k) plans are grossly underfunded.
Congress did not create 401(k) plans with the intention of replacing pensions. They were meant to supplement pensions and Social Security. While pensions aren’t perfect, you are generally better off with a pension than a 401(k).
There are many, many small business owners that prefer to do the right thing by their employees and promise them a comfortable, secure retirement. Unfortunately, they do not have the expertise to manage a pension fund. The solution: multi-employer pension plans, which covers workers from several companies.
About 2,000 companies contribute to one multi-employer fund; ninety percent of them employ less than 50 people and the average annual benefit is about $14,000.
In multi-employer plans, company contributions towards the fund are collectively bargained. Multi-employer plans aren't union run. They are run by trustees chosen by both management and labor, and they are managed by investment professionals.
Like some single-employer pensions, some multi-employer plans are in trouble. They suffered from the worldwide financial crisis and structural changes within the economy which have forced many contributing employers out of business.
A few years ago, Congress passed through new regulations that raised the amount companies must give to the plans. These new funding regulations are threatening the survival of the many small businesses. Unless Congress acts, some will have to divert cash to multi-employer plans instead of expanding their businesses. Other small companies will lay off workers and many may shut down.
As of July 2010, legislation to ease the hardship of those employers has been proposed by Democratic Senator Bob Casey of Pennsylvania, Democratic Representative Earl Pomeroy of North Dakota and Republican Representative Pat Tiberi of Ohio. The bills hope to lessen the burdens of businesses that have to pay for retirees whose employers went under. They’ll also prevent a downward spiral that stiff funding requirements drive employers out of business that will trigger even stiffer funding requirements driving more employers out of business.
These Congressional bills deserve the support of all hard-working individuals. Because they will help our economy creates jobs. Therefore, they’ll help all hard-working individuals.