WP: Retirement's Unraveling Safety Net

[Pirate Smile]

Retirement's Unraveling Safety Net
Social Security Is Least of Newer Generations' Worries

By Dale Russakoff
Washington Post Staff Writer
Sunday, May 15, 2005; Page A01

MIDDLE RIVER, Md. -- If it's a clear morning, you can count on seeing 80-year-old Junior K. Paugh strolling streets that tell his life story: Propeller Drive, Fuselage Avenue, Cockpit Street, Compass Road. He's been here more than 60 years, ever since aviation pioneer Glenn L. Martin put him to work making seaplanes and bombers at the defense plant down the road. Franklin D. Roosevelt was president and Martin himself walked the factory floor, urging on workers as the nation went to war.

Out of that perilous time came Paugh's now predictable world. He never is short of money, thanks to Social Security and his company pension that will last as long as he does. Health care costs him next to nothing, thanks to Medicare and retiree health insurance. His Baltimore County home is long paid for, thanks in part to a below-market price of $4,400, a result of wartime subsidies for defense-related housing construction.

"I feel completely secure," says Paugh, no small triumph for the third of 13 children born to farmers in Depression-era Appalachia. The triumph is not only his but also the country's -- the fulfillment of a New Deal vision of cradle-to-grave security, underwritten by the federal government and large industrial employers.

That vision is being supplanted by one President Bush calls the Ownership Society, in which the burdens of economic security -- and, the president hopes, the rewards -- shift back to individuals. Social Security is only one aspect of the shift. The safety net big companies wove for Paugh's generation -- long-term employment, pension security, retiree health insurance -- has been giving way for so long that its unraveling is mere background accompaniment to Washington's noisy debate over Social Security. But in the lives of most middle-class families, it stays in the foreground, inseparable from the Social Security discussion.

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/14/AR2005051400515.html

[Trajan]

1. I have over 24 years vested ...

In the collective McDonnell Douglas/Rockwell/Boeing megacorporation pension plans ...

I wonder: will it be there when I need it ? ..

The great 20th century tradition of a secure retirement is being systemtically destroyed by greedy corporatists in league with the party in power: the GOP ...

What happened at United is THE wakeup call for ALL generations: ... Will we heed that call and stand up for United Employees ?

They .. is us ....

[Erika]

2. This country's workers are screwed.

Bush wants to cut benefits for the middle class under the SS program
and the pension plans are going broke and benefits are being cut in half, paid for by the government not the employer. Bush's America.

[hector459]

3. It all started with Ronnie. Worker, smurkers. No capitalist cares about

wokers...that's for socialists and communists. If you add up the billions in pay to corporate CEOs over past 20 years, you will see where the security net was torn. Meanwhile, you have sold your souls to the company store... and they now have you by the balls.

[grasswire]

4. this writer makes a huge error

"The triumph is not only his but also the country's -- the fulfillment of a New Deal vision of cradle-to-grave security, underwritten by the federal government and large industrial employers."

No. The federal government did not provide the security. The American people did. And the large industrial employers did not "give" employees their pensions. The pensions were part of the remuneration for work.

Don't let them frame the safety nets as gifts, unearned.

[Zorra]

5. Yep, and those remunerative pensions were probably fought long

and hard for by a union at some time.

[Erika]

6. How true. Pension plans were a part of remuneration

used to solicit workers and retain them. The employers have opted out of their original agreements and left the liability to the federal government, aka tax payers. This didn't stop the employers from paying billions of $ over the years to CEO's even as they did not keep their companies competitive or used wise business practices.

Like I said, workers got screwed from being both an employee and a tax payer.

[UpInArms]

8. here's some good background on those pension plans

http://freeinternetpress.com/modules.php?name=News&file=article&sid=3585

excerpt:

In the past, few retirement dollars found their way to Wall Street. IRAs and 401(k)s had yet to be invented, and few companies offered private pension plans of any kind. In 1950, General Motors—then, as now, among the largest employers on earth—began to change that with a new form of compensation. The company would withhold money from paychecks, much like the Social Security Administration was doing, and add money of its own to build up a reserve to pay retirees many decades into the future. Generally called a “defined benefit” plan, the scheme guaranteed retirees a specific (defined) monthly payment until they died.

Other giants of American industry soon followed, and the funds grew quickly. In most of them, at least half the money was put into the stock market. Workers thus would gain, at least in theory, a stake in the prosperity of their company, building loyalty to management while also providing companies with a captive source of credit—their own workforce. All of that new cash contributed to the bull market of the 1950s.

Management philosopher Peter Drucker called this process “pension-fund socialism” and hailed it as the most positive social development of the twentieth century, because it would at last merge the interests of labor and capital. Louis O. Kelso and Mortimer J. Adler even wrote a book called The Capitalist Manifesto announcing that a new epoch of harmony between workers and owners was at hand, because soon all workers would be owners.

It didn’t quite work out that way. Many companies used retirement reserves to buy their own stocks, bidding up their share price and allowing them to take over other firms on favorable terms, especially as mergers and acquisitions gained momentum in the 1960s. The problem was that when companies went bankrupt—especially small firms—the collapse also wiped out the pension funds invested in those companies. Employees of such companies found themselves not only out of work but stripped of the money they thought was being saved up for their retirement.

...more...

[susanna]

10. Absolutely!

Pensions were earned...period. They were NEVER supposed to be some sort of "safety net" -- THAT was what Social Security was supposed to be.

Employers defaulting on pensions should be seen as lower than pond scum. They made the deals; they should honor them.

[lovuian]

7. Its amazing how Republicans can see that the elderly have

a little bit of money and they want it all!!!

Thank God for Social Security and Medicare and Pensions!!!

or the American standard of living would hit rock bottom which its slowly heading that way!!!

I can't believe Americans are going to stand there and watch this go down the tubes quietly!!!

[Erika]

9. Lou Dobbs said it is now the airline pensions going down now

to be followed by the automobile industry. It's disgusting that these huge employers are skipping out on their pension deals with employees and sticking the bills to the federal government plan that underwrities the pensions, aka the tax payers. Of course the benefits will be greatly reduced. So Bush wants to pay the middle class reduced SS benefits, while giving them reduced pension benefits? CE pay remains untouched?

[antigop]

11. If you have a defined benefit pension plan it is at risk-- PLEASE READ

Please read the action alert that was posted on the following message board:

http://finance.groups.yahoo.com/group/ibmpension/message/57534

The IBM employees sued over the conversion to a cash balance pension plan and won in federal court. The case will be appealed.

Now it looks like Congress will get involved to legalize cash balance and hybrid conversions of defined benefit pension plans.

WE NEED TO SCREAM ABOUT THIS, FOLKS!

YOUR PENSION IS AT RISK! You will have to fight for it.

Pass the word -- let everyone know.

[Bozita]

12. "ownership society" = euphamism for "I've got mine; good luck to you"

The Anti-Darwinians are preaching survival of the fittest.

Go figure.