Can we call it a comeback...for DB plans?</h1> <article> <h1>Can we call it a comeback...for DB plans?</h1> <p>jleavelle — Tue, 03 Apr 2012 15:21:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>I hope so. According to a newly-released Towers Watson survey, it looks like defined benefit pension plans are making a comeback – especially among younger workers. </p> <p>According to the <a href="http://www.towerswatson.com/newsletters/insider/6530">2011 Towers Watson Retirement Attitudes Survey</a>, younger workers are increasingly recognizing that guaranteed income in retirement should play a role in the decision-making process when selecting an employer. The survey shows that 63 percent of workers under 40 said that their company’s defined benefit plan was an important factor when they decided to work for their current employer, up from 28 percent in 2009. DB plans also help with employee retention: 72 percent of the same group of workers say that their employer’s retirement plan is an important reason that they haven’t switched jobs, up from 37 percent in 2009. </p> <p>The data also show that younger workers aren’t the only ones who recognize the economic security that pensions can provide. The percentage of workers 40 and older who say that their employer’s defined benefit plan is a big reason why they stay with their current employer is also on the rise. Other findings from this survey show that growing numbers of workers in all age groups would trade pay increases for more generous retirement benefits. Not only that, employees with DB plans are more confident in their ability to retire than those who rely solely on 401(k)s and other retirement savings plans. </p> <p>It isn’t that hard to figure out why employees of all ages are placing renewed importance on traditional pensions. After all, these retirement plans provide retirees with guaranteed lifetime income. In 401(k) and other retirement savings plans, workers must figure out how much they can afford to set aside, decide where to invest their money, have the discipline keep the money in the 401(k) until retirement, and then cross their fingers that the stock market doesn’t crash. Finally, once they do retire, they have to figure out how to make their 401(k) money last. Maybe that’s why at least one poll shows that <a href="http://www.retirement-usa.org/retirement-crisis-what-americans-believe-0">Americans fear retirement more than death</a>. </p> <p>On second thought, I’m not sure I should call this a comeback. After all defined benefit pension plans have been here for years. <a href="http://www.youtube.com/watch?v=-fARpKl1Bsc">Wink</a>.</p> <p>Now if only employers would listen and stop <a href="http://www.pensionrights.org/publications/fact-sheet/companies-have-changed-their-defined-benefit-pension-plans">freezing or terminating</a> their traditional pension plans!</p> <p>Hat tip to <a href="http://www.planadviser.com/NewsArticleInvesting.aspx?id=17321&page=1">PlanAdviser</a>.<br /> <a href="http://www.towerswatson.com/assets/pdf/6530/Towers-Watson-Insider-Retirement-Attitudes-Series.pdf">2011 Towers Watson Retirement Attitudes Survey</a></p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Tuesday, April 3, 2012</span> </div> </div> </div> </article> <article> <h1>Relying on tonight’s Mega Millions jackpot to fund your retirement?</h1> <p>jleavelle — Fri, 30 Mar 2012 22:35:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>Looking for ways to finance your retirement? If you’re like Jason Schutz of St. Cloud, Minnesota and you only have a 401(k) plan, you might have bought a lottery ticket for tonight’s record-breaking $640 million Mega Millions jackpot. In today’s <em><a href="http://www.usatoday.com/news/nation/story/2012-03-29/megamillions-jackpot/53872762/1">USA Today</a></em>, Schutz says that his only hope for retirement is to win the lottery. "My 401(k) is worth so little. My only chance to retire is Mega Millions," he says.</p> <p>Good luck, Jason, but according to the article, your odds of winning are 1 in 176 million. Retirement shouldn’t be a gamble. That’s why we’re part of <a href="http://www.retirement-usa.org/">Retirement USA</a>, a campaign for a new type of retirement plan that would provide all Americans with universal, secure, and adequate income to supplement Social Security.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Friday, March 30, 2012</span> </div> </div> </div> </article> <article> <h1>To expand retirement security, a look to the states</h1> <p>kfriedman — Wed, 28 Mar 2012 18:29:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>There is a movement afoot to use the efficiencies of public retirement systems to administer new types of pension plans for private-sector workers.</p> <p>Last week, in a <em>New York Times</em> op-ed titled, “<a href="http://www.nytimes.com/2012/03/16/opinion/pension-funds-for-the-public.html">Don’t Cut Pensions, Expand Them</a>,” Professor Teresa Ghilarducci of the New School for Social Research argued that, “Rather than curtailing public and private pensions, New York and other states could save millions of workers from impending poverty by creating public pensions for everyone.” She asserts that it would be far more efficient to use the institutional money managers that now invest money for the state to do the same job for private-sector workers.</p> <p>Some states – and at least one city – have already taken steps in this direction:</p> <ul> <li>Massachusetts recently enacted <a href="http://www.malegislature.gov/Bills/187/House/H03754">H. 3754</a>, a measure that would allow the state retirement system to establish a savings plan for small not-for-profit organizations.</li> <li>The California Secure Choice Retirement Savings Act (<a href="http://www.leginfo.ca.gov/pub/11-12/bill/sen/sb_1201-1250/sb_1234_bill_20120502_amended_sen_v96.html" target="_blank">S.B. 1234</a>), which would enable private-sector employees to join a new type of retirement plan sponsored by the state retirement system, has been introduced into both the California Senate and Assembly.</li> <li>The Connecticut General Assembly is considering <a href="http://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=5313&which_year=2012&SUBMIT1.x=0&SUBMIT1.y=0" target="_blank">H.B. 5313</a>, which would establish a commission to study the development of a state-administered retirement plan for small businesses and other employers that can’t afford to set up plans for their workers. </li> <li>In the latest development, New York City Comptroller John Liu has teamed up with Professor Ghilarducci to push for <a href="http://www.economicpolicyresearch.org/guaranteeing-retirement-income/491-scepa-a-nyc-comptroller-announce-bold-new-pension-plan-for-city.html">a pension plan for private-sector workers that would be managed by the city</a>, similar to the legislation introduced in California. </li> </ul> <p>While Congress is engaged in partisan griping and inaction, the states can lead the way in developing new retirement solutions that expand secure and adequate coverage for all, helping to avert a bigger retirement income crisis.</p> <p>Read this week’s <em><a href="http://www.nytimes.com/2012/03/27/business/ideas-on-company-pensions-include-turning-to-states.html?_r=1">New York Times article</a></em> about these initiatives.<br />Read my <a href="http://www.pensionrights.org/newsroom/speeches-statements/pension-rights-center-testifies-support-connecticut-bill-about-public-r">testimony</a> in support of the Connecticut legislation.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, March 28, 2012</span> </div> </div> </div> </article> <article> <h1>The latest on American Airlines</h1> <p>nhwa — Wed, 14 Mar 2012 20:05:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>Most American Airlines employees can breathe a sigh of relief (sort of), now that the company has <a href="http://www.star-telegram.com/2012/03/07/3793300/amr-proposes-freezing-pensions.html">announced</a> that it would <em>not</em> seek to terminate three out of four of its pension plans as part of its <a href="http://www.pensionrights.org/blog/updated-american-airlines%E2%80%99-bankruptcy-%E2%80%93-what-does-it-mean-its-pensions">bankruptcy</a> reorganization. Rather, the company <a href="http://www.aa.com/content/images/amrcorp/jjb_pension_letter_all.pdf">will freeze</a> those plans, meaning that employees will stop earning benefits after a certain date.</p>  <p>While <a href="http://www.pensionrights.org/publications/fact-sheet/pension-freezes">freezing a pension plan</a> is rarely a good thing for employees, certainly it is better than <a href="http://www.pbgc.gov/res/factsheets/page/termination.html">terminating a plan</a>. With a freeze, at least the workers and retirees will get all of the benefits that they have earned up to the date of the freeze. Had American terminated the plans and dumped the obligations onto the Pension Benefit Guaranty Corporation, pension benefits would have been subject to the PBGC’s <a href="http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html">benefit limits</a>, which likely would have resulted in pension cuts for higher-paid and longtime employees. A freeze also preserves special early retirement benefits – in a plan termination, pensions taken early are greatly reduced.</p> <p>American has not yet decided what to do about its pilots’ pension plan. The company <a href="http://www.aa.com/content/images/amrcorp/jjb_pension_letter_pilots.pdf">claims</a> that the availability of lump-sum pension payouts in a freeze might spur too many pilots to take early retirement, causing personnel problems. Lump-sum payouts are not an option when a plan is terminated, and, as one of the higher paid groups of employees at the airline, pilots probably stand to lose the most in benefits in a termination. American says that it will work with the pilots’ union and the PBGC to work out a solution. (Read our <a href="http://www.pensionrights.org/publications/fact-sheet/think-twice-when-choosing-lump-sum-or-annuity">fact sheet</a> on lump sums vs. annuities.)</p> <p>It should be noted that American Airlines likely would have terminated all of its pension plans, had it not been for the strong stand that the Pension Benefit Guaranty Corporation (PBGC) and the unions took in opposing termination. No doubt they were concerned about American following the bad example set by United Airlines, which dumped its pension obligations in 2005 after filing for bankruptcy. The move saddled the PBGC with its <a href="http://www.pbgc.gov/documents/pension-insurance-data-tables-2010.pdf.">largest plan termination</a> to date and forced many employees to <a href="http://articles.latimes.com/2006/feb/15/business/fi-pension15">take pension cuts</a>. To add insult to injury, United executives <a href="http://www.cbsnews.com/2100-18563_162-5714036.html">received bonuses and stock options</a> worth millions soon after the company emerged from bankruptcy.</p> <p>Last Friday, PBGC Director Joshua Gotbaum used American Airliness as the jumping-off point for a <a href="http://www.newsday.com/opinion/oped/gotbaum-don-t-ignore-retirement-insecurity-1.3592083">terrific op-ed</a> on the larger issue of retirement security. In the piece, Gotbaum makes excellent points about the importance of traditional pensions and Social Security, the drawbacks of 401(k) plans, and why working longer isn’t always realistic. I liked this observation in particular:</p> <blockquote><p>Retirement shouldn't be a race to the bottom. Unfortunately, some of those without good pensions think other people should lose theirs. "Beggar thy neighbor" is not a way to make us more secure.</p> <p>Instead of envying those with some security, we should be developing new options -- options for employers and employees to share responsibility for saving and to reduce the administrative and marketing costs of retirement plans.</p> </blockquote> <p>Coming up with new ideas for pension plans is of course the goal of <a href="http://www.retirement-usa.org/">Retirement USA</a>. It was also the topic of our recent <a href="http://www.pensionrights.org/what-we-do/events/re-imagining-pensions">Re-Imagining Pensions</a> conference, where Gotbaum was a participant. For more information about the conference and to watch videos of the discussions, visit the <a href="http://www.pensionrights.org/what-we-do/events/re-imagining-pensions">conference webpage</a>. </p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, March 14, 2012</span> </div> </div> </div> </article> <article> <h1>Setting the record straight: Saint Peter’s University Hospital’s pension plan</h1> <p>jleavelle — Wed, 29 Feb 2012 16:32:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>A new PRC <a href="http://www.pensionrights.org/publications/fact-sheet/saint-peters-university-hospital-retirement-plan-law-and-facts">fact sheet</a> refutes claims made by Saint Peter’s University Hospital (SPUH) that its pension plan is a <a href="http://www.pensionrights.org/publications/fact-sheet/facts-about-church-pension-plans">church plan</a> and has never been subject to federal law. On Monday, SPUH president and CEO Ronald C. Rak sent a <a href="http://dl.dropbox.com/u/21179812/spuh/Pension%20Letter%202-24-12.pdf">letter</a> informing all pension plan participants that their pension, despite decades of actions and written assurances to the contrary, was never covered by the <a href="http://www.pensionrights.org/blog/happy-birthday-erisa">Employment Retirement Income Security Act of 1974</a>, the nation’s private pension law.</p> <p>This <a href="http://dl.dropbox.com/u/21179812/spuh/Pension%20Letter%202-24-12.pdf">letter</a> is the latest move made by the hospital to shirk its responsibilities to its employees and boost its bottom line – at the expense of its employees’ retirement security. </p> <p>Church plan status would wipe out all federal protections for the participants’ pensions, including the all-important pension insurance protection provided by the <a href="http://www.pbgc.gov/">Pension Benefit Guaranty Corporation</a> (PBGC). Because the SPUH pension plan is only 63 percent funded, lack of insurance protection means that participants could lose their hard-earned benefits if the plan terminates without PBGC insurance. Read our fact sheet to learn more about <a href="http://www.pensionrights.org/publications/fact-sheet/why-does-it-matter-if-pension-plan-church-plan">why the distinction between an ERISA plan and a church plan is so important</a>.</p> <p>Many of the Saint Peter’s employees and retirees I have spoken with feel that by denying them these important protections Saint Peter’s is turning its back on them. </p> <p>While outrageous and unfounded, this letter should be taken seriously. That’s why we have released a fact sheet, <a href="http://www.pensionrights.org/publications/fact-sheet/saint-peters-university-hospital-retirement-plan-law-and-facts">Saint Peter’s University Hospital Retirement Plan: The law and the facts</a>, disputing SPUH claims that its pension plan was never covered by ERISA.</p> <p>SPUH employees and retirees are currently awaiting notification from the Internal Revenue Service about whether it has deemed their pension plan a church plan. In the meantime, they are keeping active on their blog, <a href="http://www.spuhpension.com/">Save Your Saint Peter’s Retirement Plan</a>, and contacting the media to voice their concerns.</p> <p>They have also done some research and discovered that the chair of the SPUH Board of Trustees is none other than Donald M. Daniels, who served as CEO of Cathedral Healthcare System, which was affiliated with the Hospital Center at Orange when it sought and won approval from the Internal Revenue Service to convert the Hospital Center at Orange’s pension plan into a <a href="http://www.pensionrights.org/publications/fact-sheet/facts-about-church-pension-plans">church pension plan</a>. Participants in the Hospital Center at Orange pension plan have learned that their pension plan will run out of money to pay their pensions in two years if pension insurance protection is not restored to their plan.</p> <p>At the Pension Rights Center, we think Saint Peter’s claims that its pension plan was never covered by ERISA are baseless. Because these claims could be confusing to participants who have been repeatedly told that their pensions are fully protected by federal law, we have released our fact sheet, <a href="http://www.pensionrights.org/publications/fact-sheet/saint-peters-university-hospital-retirement-plan-law-and-facts">Saint Peter’s University Hospital Retirement Plan: The law and the facts</a>, to set the record straight.</p> <ul> <li>Read our new fact sheet, <a href="http://www.pensionrights.org/publications/fact-sheet/saint-peters-university-hospital-retirement-plan-law-and-facts">Saint Peter’s University Hospital Retirement Plan – The law and the facts</a>.</li> <li>Learn more about <a href="http://www.pensionrights.org/publications/fact-sheet/facts-about-church-pension-plans">church pension plans</a>.</li> <li>Visit the blog created and maintained by SPUH pension plan participants: <a href="http://www.spuhpension.com/">Save Your Saint Peter’s Retirement Plan</a></li> <li>Read <a href="http://www.pensionrights.org/tags/church-pension-plans">news articles</a> about church pension plans.</li> </ul> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, February 29, 2012</span> </div> </div> </div> </article> <article> <h1>The problem with Mitt Romney's IRA</h1> <p>jleavelle — Thu, 02 Feb 2012 18:09:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>In the last few weeks Mitt Romney’s <a href="http://www.pensionrights.org/factsheet-topic-areas/individual-retirement-accounts">Individual Retirement Account</a> has come under <a href="http://moneyland.time.com/2012/01/20/romneys-ira-big-and-possibly-misdirected/">intense</a> <a href="http://www.reuters.com/article/2012/01/24/us-usa-campaign-romney-ira-idUSTRE80N04E20120124">scrutiny</a> because of the amount of money he has stashed away in it.<em>The</em> <em>Wall Street Journal </em><a href="http://online.wsj.com/article/SB10001424052970204468004577168972507188592.html">estimates</a> the value of Romney’s IRA to be somewhere between a whopping $20 million and a staggering $101.6 million.</p> <p> </p> <p>Compare this to the numbers in a <a href="http://aging.senate.gov/crs/pension22.pdf">Congressional Research Service analysis</a> of IRA data from the Survey of Consumer Finances. According to the analysis, in 2007 the median account balance for a traditional IRA was only $29,000, while the median balance of a rollover IRA was just $53,000. This is a far cry from the massive size of Mitt Romney’s IRA, which, by the way, is perfectly legal and operates in full accordance with the law.</p> <p>And that’s the problem.</p> <p>As our <a href="http://www.pensionrights.org/factsheet-topic-areas/individual-retirement-accounts">IRA fact sheets</a> point out, people who use their IRAs to save for retirement receive certain tax advantages. Yet, <a href="http://www.taxpolicycenter.org/briefing-book/key-elements/savings-retirement/who.cfm">according to the Tax Policy Center</a>, most of the tax advantages for retirement savings go to those who can already afford to save for retirement instead of the people who really need it. As the Center’s executive vice president and policy director Karen Friedman stated in her September 2011 <a href="http://www.pensionrights.org/sites/default/files/docs/110915_finance_committee_tax_expenditures_written_statement_final.pdf">testimony</a> before the Senate Finance Committee, “two‐thirds of the value of tax expenditures for retirement savings plans goes to households in the top income quintile.” </p> <p>Unfortunately, one of the proposed solutions to the problem of people not saving enough for retirement is simply to increase the <a href="http://www.pensionrights.org/publications/fact-sheet/retirement-plan-contribution-and-benefit-limits">maximum contribution limits to retirement plans</a>. However, another Congressional Research Service report,<a href="/sites/default/files/docs/crs_report_individual_retirement_accounts_iras_-_issues_and_proposed_expansion_2.pdf"> Individual Retirement Accounts (IRAs): Issues and Proposed Expansion</a>, notes that proposals to expand the amount people can save in IRAs are more likely to “direct the benefits [of IRA tax breaks] toward higher-income individuals.</p> <p>So, the data show that these tax incentives are upside-down, disproportionately benefitting higher-income individuals who can already afford to save for retirement. But what about people who are living paycheck to paycheck and struggling with everyday costs like health care, transportation, and child care? A Government Accountability Office report, <a href="http://www.gao.gov/assets/320/317137.pdf">Private Pensions: Some Key Features Lead to an Uneven Distribution of Benefits</a>, outlines several incentives that would help low-income workers become better prepared for retirement. Among these is a <a href="http://www.pensionrights.org/learn-issues/policy-agenda/agenda-3/h">PRC-supported proposal</a> that would expand and extend the Saver’s Credit for low-income workers. Other recommendations include providing a government match for the contributions low-income workers make to their retirement plans, while another recommendation aims to spur retirement saving among low-income workers by depositing the tax credit directly into their retirement savings accounts.</p> <p>While it’s great that Congress recognizes the need to encourage retirement saving, it is time to look at these incentives to ensure that they are going to the people who need help saving for retirement the most. </p> <p><em>Photo credit: C. Berlet under a <a href="http://en.wikipedia.org/wiki/en:Creative_Commons" title="w:en:Creative Commons" class="extiw">Creative Commons</a> <a href="http://creativecommons.org/licenses/by-sa/3.0/deed.en" class="external text" rel="nofollow">Attribution-Share Alike 3.0 Unported</a> license.</em></p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Thursday, February 2, 2012</span> </div> </div> </div> </article> <article> <h1>Is a 401(k) match really “free money”?</h1> <p>jleavelle — Fri, 13 Jan 2012 18:51:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>This week’s issue of <em>Time</em> features an article by Stephen Gandel called “<a href="http://moneyland.time.com/2012/01/12/how-401ks-make-many-americans-poorer/">How 401(k)s Make Many Americans Poorer</a>.” It sheds light on a new <a href="http://crr.bc.edu/images/stories/Briefs/IB_11-15_508.pdf">study</a> conducted by the <a href="http://www.urban.org/">Urban Institute</a> and published by the <a href="http://crr.bc.edu/">Center for Retirement Research</a>. The study finds that employees at companies that provide an employer match to 401(k) contributions tend to have lower salaries than employees at companies that do not contribute to employee retirement plans. </p> <p>In fact, Gandel notes that “for many employees the salary dip was roughly equal to the size of their employer’s potential contribution.” </p> <p>The implication is that the employer’s 401(k) match makes up a difference in any decrease in salary. Looking at it another way, workers are essentially paying for their 401(k) match. </p> <p>Also, it’s important to remember that the 401(k) match is entirely optional. Hence, Gandel’s wording, “employer’s <em>potential</em> contribution.” As we’ve seen since 2008, many companies <a href="http://www.pensionrights.org/publications/fact-sheet/companies-have-changed-or-temporarily-suspended-their-401k-matching-contribu">reduced or eliminated completely their 401(k) match</a> during the recent recession.</p> <p>Gandel goes on to refute the study’s second finding – that 401(k) plans tend to benefit lower-income workers more than higher-income workers. The study claims that salaries for higher-paid workers drop more than salaries for lower-paid workers, when a company has a 401(k) plan. However, Gandel points out that the study’s authors overlook a key fact: not everyone participates in a 401(k) plan, and lower-income employees are much less likely to participate than higher-paid ones. For lower-income employees who do not get a match because they do not contribute to their employer’s 401(k) plan, “working at a company with a generous 401(k) plan will actually make them poorer” because every employee gets a reduced salary, whether they contribute to the plan or not.</p> <p>Gandel further notes that “even considering the different impacts on wages, the benefits of our nation’s 401(k) system still go overwhelming [sic] to the rich.” In her 2011 <a href="http://www.pensionrights.org/sites/default/files/docs/110915_finance_committee_tax_expenditures_written_statement_final.pdf">testimony</a> before the Senate Finance Committee, PRC’s executive vice president and policy director Karen Friedman addresses the issue of who benefits most from the tax incentives associated with 401(k) plans. Karen notes that tax incentives “end up disproportionately benefiting the nation’s most affluent employees, who would almost certainly save for retirement even without tax incentives.”</p> <p>Gandel is the author of a 2009 article, “<a href="http://www.time.com/time/magazine/article/0,9171,1929233,00.html">Why It's Time to Retire the 401(k)</a>,” which we blogged about <a href="http://www.pensionrights.org/blog/time-magazine-says-%E2%80%9Ctime-retire-401k%E2%80%9D">here</a>.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Friday, January 13, 2012</span> </div> </div> </div> </article> <article> <h1>[UPDATED] American Airlines’ bankruptcy – what does it mean for its pensions?</h1> <p>nhwa — Wed, 14 Dec 2011 17:34:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>No doubt you’ve heard that American Airlines has <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=irol-newsArticle&id=1634091">filed for bankruptcy</a>. The airline has four underfunded pension plans, and their fate is the source of much speculation. Despite <a href="http://www.newson6.com/story/16298164/american-airlines-employees">meetings the company has held</a> with employees to discuss their pensions, workers remain concerned.</p> <p> Will the company terminate the plans and dump their liabilities onto the Pension Benefit Guaranty Corporation?</p> <p>In <a href="http://www.pbgc.gov/news/press/releases/pr12-08.html">a statement</a> about the bankruptcy, the PBGC said,</p> <p style="padding-left: 30px;">American Airlines sponsors four traditional pension plans that cover almost 130,000 participants. As of today, the plans collectively had about $8.3 billion in assets to cover about $18.5 billion in benefits. If American Airlines were to end their plans, the agency would be responsible for paying about $17 billion in benefits; about $1 billion in benefits would be lost.</p> <p><em>UPDATE, Dec. 16: Josh Gotbaum, director of the PBGC, released <a href="http://www.pbgc.gov/news/press/releases/pr12-11.html">a strong statement</a> supporting traditional pensions in reaction to remarks made by American Airlines Counsel Harvey Miller.</em></p> <p>While no announcement has been made yet about what might happen to the pension plans, it’s important that American Airlines employees and retirees be aware of what could happen if the PBGC takes over the plans. Here are some points to consider: </p> <ul> <li>The PBGC states that “about $1 billion in benefits would be lost,” because the agency has <a href="http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html">limits</a> on the amount of benefits it will pay. These limits would mostly affect those taking early retirement and higher-paid employees, such as pilots who have been with the company for a long time. Most employees and retirees would get the full benefits they had earned at the time of the plan’s termination.</li> <li>The Pension Protection Act of 2006 allows the PBGC to <a href="http://www.pbgc.gov/documents/2011-14241.pdf">back-date</a> a plan’s termination to the date that the company filed for bankruptcy. This means that, even if the plans don’t actually terminate until 2012 or later, the <a href="http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html#2011">2011 guarantee limits</a> will still apply, since the company filed for bankruptcy in 2011.</li> </ul> <p>Also, this means that time spent working for the company between the bankruptcy filing and the plan termination won’t count towards an employee’s service when calculating the pension benefit. For someone who is close to achieving the required age and years of service for special early retirement benefits, a few months could mean the difference between getting a full pension or having to take a much-reduced early retirement benefit.</p> <ul> <li>The PBGC has this <a href="http://www.pbgc.gov/about/faq/pg/general-faqs-about-pbgc.html">helpful FAQ</a> for workers and retirees whose plans it has taken over or might take over, and the Department of Labor has a <a href="http://www.dol.gov/ebsa/newsroom/fsbankruptcy.html">fact sheet</a> on how a company’s bankruptcy might affect employee benefits.</li> </ul> <p>The Pension Rights Center has long been concerned about the treatment of pension plan participants in bankruptcy and the ability of companies to file for bankruptcy and abandon their pension plans. In 2008, we <a href="http://www.pensionrights.org/policy/presentations/HR3652-subcommittee-hearing-testimony.pdf">testified</a> before a U.S. House of Representatives subcommittee in support of a bill that would increase protections for workers and retirees when companies file for bankruptcy. And our <a href="http://www.pensionrights.org/learn-issues/policy-agenda">Consumer Agenda for Retirement Security</a> includes <a href="http://www.pensionrights.org/learn-issues/policy-agenda/agenda-4/b">a provision</a> that addresses these concerns.</p> <p>In related news, last month, the PBGC’s Office of the Inspector General issued a <a href="http://oig.pbgc.gov/audit/2011/pdf/PA-10-72-1.pdf">report</a>, stating that the PBGC mismanaged the takeover of United Airlines’ pension plans. Apparently, many retirees’ benefits were miscalculated, resulting in either underpayment or overpayment.</p> <p>The PBGC <a href="http://www.pbgc.gov/news/press/releases/pr12-09.html">says</a> that it is taking steps to correct these errors. However, everyone with a pension should be aware that <strong>benefit miscalculations often happen</strong>, whether it’s by the PBGC or the employer itself. <a href="http://www.pensionrights.org/publications/report/unfair-pension-takebacks-what-can-be-done-protect-retirees">Recoupment</a> -- when a pension plan realizes that it has been overpaying a retiree and demands repayment – is problem that we <a href="http://www.pensionrights.org/find-help/success-stories/upper-midwest-pension-rights-project-helps-widow-avoid-recoupment-overpaym">frequently</a> <a href="http://www.fox6now.com/news/witi-20110428-c6-adt-pension-audit,0,3405633.story">hear</a> <a href="http://www.pensionrights.org/blog/company-shows-compassion">about</a>. Fortunately, there are <a href="http://www.pbgc.gov/docs/98-14448.htm">limits</a> to the amount that the PBGC can recoup at one time. </p> <p>As the American Airlines bankruptcy proceeds, we’ll keep an eye on what’s happening to the company’s pensions. In the meantime, remember that the <a href="http://www.pensionrights.org/counseling-projects"><strong>Pension Counseling and Information Projects</strong></a><strong> can help workers, retirees, and their families understand their legal rights when it comes to pensions</strong>. The <a href="http://www.southcentralpension.org/">South Central Pension Rights Project</a> is located in Texas, where American Airlines is headquartered, and there are pension counseling projects that cover <a href="http://slh.lsnc.net/pension/">California</a> and <a href="http://www.sbls.org/index.php?id=253">New York</a>, where two of American’s major hubs are located. Check out the <a href="http://www.pensionrights.org/counseling-projects">complete list</a> of pension counseling projects to see if you are covered by one. </p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, December 14, 2011</span> </div> </div> </div> </article> <article> <h1>Is your pension plan having a religious conversion? Here's what you can do.</h1> <p>jleavelle — Thu, 01 Dec 2011 11:33:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>Have you received a notice informing you that your pension plan is seeking approval from the Internal Revenue Service to convert to a “church plan”? Here’s what this means to your retirement – and what you can do about it.</p>  <p>Many people who work for nonprofit organizations that are associated with religious organizations – hospitals, schools, community centers – have begun to receive notices informing them of a change that could end up significantly reducing their pension benefits.</p> <p>As a result of a <a href="http://www.pensionrights.org/newsroom/releases/pension-rights-center-applauds-irs-opening-%E2%80%9Cchurch-plan%E2%80%9D-rulings-process-comments-">new IRS procedure</a>, any pension plan that wishes to “convert” its federally-protected pension plan to a “church plan” is now required to notify the people covered by the plan that the plan intends to seek IRS approval to convert. What does such a conversion mean for you?</p> <p>Most private pension plans are protected by the federal pension law known as <a href="http://www.pensionrights.org/blog/happy-birthday-erisa">ERISA</a>. This means that these pension plans are <a href="http://www.pensionrights.org/publications/fact-sheet/federal-pension-insurance-protections-0">insured by the Pension Benefit Guaranty Corporation</a>, have minimum funding requirements, and are required to provide participants with information on the funding status of the pension plan, among many other protective features. Church plans are the only private-sector pension plans that are exempt from all of these requirements (see <a href="http://www.pensionrights.org/publications/fact-sheet/why-does-it-matter-if-pension-plan-church-plan">Why it Matters if a Pension Plan is a Church Plan</a> to learn more). This means that, if your plan becomes a church plan and your employer terminates the plan when it is underfunded, you could lose some or even all of the benefits you have earned under the plan.</p> <p>In short, church pension plans offer few or no protections and are less secure than pension plans that have ERISA protections.</p> <p>So you’ve seen or received a notice<strong><a href="/blog/your-pension-plan-having-religious-conversion-heres-what-you-can-do#footnote">*</a></strong>. Now what? Here’s what you can do:</p> <h3>Send a letter to the IRS</h3> <p>You have the right to contest your pension plan’s conversion and to ask the IRS to deny your pension plan’s request. See our <a href="http://www.pensionrights.org/publications/fact-sheet/sample-comment-letter-irs">sample letter</a> for information that you can include. Time is of the essence<strong>. All comments are due to the IRS within 60 days of the date you receive the letter from your pension plan. </strong>For example, if you received a letter post-marked November 21, 2011, your comments must be submitted to the IRS by January 20, 2012.</p> <h3>Get organized</h3> <p>Gather contact information from co-workers, retirees, and anyone else who might be affected by this change and create an e-mail list, Facebook group, or blog so that everyone can be updated about what is going on and so that you can share ideas for fighting the change. Need help? <a href="mailto:webmaster@PensionRights.org?subject=Church%20plan">Contact us</a> and we’ll help you get started.</p> <h3>Contact key decision-makers</h3> <p>Many of the people who make decisions about pension plans sit on your employer’s board of directors. Often these decision-makers are able to exert their influence to reverse the decision of the pension plan administrator. In fact, employees and retirees who are covered by the pension plan for the Jewish Community Center of Greater Washington (JCCGW) were so effective with their efforts that they were able to get JCCGW to reverse its decision to seek church plan status.</p> <h3>Contact your legislators</h3> <p>Make sure that your elected officials know that your pension plan is seeking church plan status and tell them how the change would affect you and the other people covered by the plan. <a href="http://www.pensionrights.org/take-action/ways-take-action/arrange-meetings">Arrange an in-person meeting</a>, <a href="http://www.pensionrights.org/take-action/ways-take-action/send-emails-faxes-letters">write a letter</a>, <a href="http://www.pensionrights.org/take-action/ways-take-action/make-calls">make phone calls</a> or attend a town hall meeting to share your concerns with them.</p> <p>To learn about other tactics that have been successful in bringing attention to issues related to protecting retirement security, check out our page on <a href="http://www.pensionrights.org/take-action/ways-take-action">strategies</a> that have worked in the past.</p> <p> </p> <p> </p> <p> </p> <p> </p> <p> </p> <p><a name="footnote"></a>*Employers are not required to notify participants via U.S. mail. According to IRS rules, employers can notify employees by simply posting a notice on a bulletin board that is “regularly and actively used for a wide variety of purposes by employees who are plan participants.”</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Thursday, December 1, 2011</span> </div> </div> </div> </article> <article> <h1>Have seniors gotten rich at the expense of young adults?</h1> <p>jsmith — Mon, 21 Nov 2011 19:16:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>You might think so if you read some <a href="http://www.washingtonpost.com/business/markets/census-data-show-wealth-of-older-americans-is-47-times-that-of-young-adults-widest-gap-ever/2011/11/06/gIQAs990sM_story.html">recent stories in the news</a> about wealth differences among generations. But you may want to think again.</p> <p> </p> <p>A <a href="http://www.pewsocialtrends.org/2011/11/07/the-rising-age-gap-in-economic-well-being/">recent study published by the Pew Research Center on “The Rising Age Gap in Economic Well-Being”</a> states that in 2010 households headed by seniors (adults age 65 and older) had enjoyed a 42 percent increase in net worth compared with same-aged households in 1984. At the same time, households headed by young adults (under 35) had a 68 percent decrease in net wealth over the same period. These are dramatic numbers, right?</p> <p>Not so fast. Closer reading of the report shows the economic events behind the numbers. Housing is a large part of net worth. Home values have increased dramatically since 1984. Most seniors purchased their homes before the housing bubble and have paid off their mortgages. The report tells us that older Americans have benefitted from good timing. <strong>“If it had not been for home equity, the median net worth of older American households in 2009 would have been 33% lower than that of older households in 1984, instead of 42% higher.” </strong>On the other hand, those young adults who bought homes during the housing bubble were victims of bad timing. </p> <p>The report discusses other changes since 1984. More seniors are working today (16 percent in 2010 compared to 10 percent in 1985), while young adults have delayed entering the labor force. Young adults are attending college in increasing numbers and, as a result, more young adults have debt from college loans. Young adults also are delaying marriage and more young adults are single parents – two factors linked to lower household wealth.</p> <p>You get the idea. It pays to read beyond the headlines.</p> <p>Significantly, the day after the Pew Report made headlines, the Census Bureau issued a <a href="http://www.washingtonpost.com/business/economy/census-bureau-report-more-americans-living-in-poverty/2011/11/07/gIQAAHm1wM_story.html">new comprehensive poverty measure</a> that shows that <strong>poverty among the elderly is much higher than previously estimated</strong> – 16 percent for persons over 65 rather than the 9 percent</p> <p>originally reported. That is consistent with Census data showing that, in 2010, half of all retirees 65 and over who were no longer in the workforce had a yearly income of less than $<a href="http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/index.html#table2">16,140</a>. To put this in perspective, that’s only $1,060 more than the earnings of our lowest paid workers, who earn the federal minimum wage of $<a href="http://www.dol.gov/whd/flsa/index.htm">15,080</a> a year.</p> <p>Older Americans are a diverse group. While many may have benefited from rising home values, work opportunities, and pensions, too many others have few assets, no job, no pension, and are struggling to survive on very limited income. Simply put: Seniors are not the ‘greedy geezers’ that some would like us to believe. </p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Monday, November 21, 2011</span> </div> </div> </div> </article> <article> <h1>"Retirement Heist: Overlooked Causes of the Retirement Crisis."</h1> <p>nhwa — Fri, 11 Nov 2011 14:42:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>On Monday, the Pension Rights Center, the New America Foundation, and AARP hosted a discussion, "<a href="http://newamerica.net/events/2011/retirement_heist">Retirement Heist: Overlooked Causes of the Retirement Crisis</a>." The forum centered on investigative journalist Ellen Schultz’s new book, <em><a href="http://www.retirementheist.com/">Retirement Heist</a></em>, which we’ve <a href="http://www.pensionrights.org/blog/shining-light-hidden-pension-world">mentioned</a> <a href="http://www.pensionrights.org/blog/retirement-heist-steals-spotlight">before</a>. Speakers included the author herself, Assistant Labor Secretary <a href="http://www.dol.gov/ebsa/aboutebsa/org_chart.html#section1">Phyllis Borzi</a>, <a href="http://twitter.com/#!/davidcertner">David Certner</a> of AARP, <a href="http://www.actuary.org/seniors.asp">Don Fuerst</a> of the American Academy of Actuaries, <a href="http://newamerica.net/user/16">Michael Calabrese</a> of the New America Foundation, and our own director, <a href="http://www.pensionrights.org/what-we-do/staff/staff-bios#k1">Karen Ferguson</a>. </p>  <p>The discussion was a lively and illuminating one, with all of the speakers recognizing the important contributions that Ellen’s incisive reporting has made to protecting employees and retirees and reforming pension laws. Despite some disagreement over the causes and scope of current retirement insecurity, every speaker acknowledged that we still have a long way to go towards achieving a retirement system that works for everyone. </p> <p>If you missed the live webcast of the event, you can watch it on the New America Foundation’s <a href="http://newamerica.net/events/2011/retirement_heist">website</a> or on <a href="http://www.youtube.com/watch?v=0GqGtkge5dQ">YouTube</a>. You can also read Karen Ferguson’s remarks <a href="http://www.pensionrights.org/newsroom/speeches-statements/remarks-karen-ferguson-retirement-heist-overlooked-causes-retirement-cr">here</a>. To see pictures from the event, check out the <a href="https://www.facebook.com/media/set/?set=a.10150362951103727.348585.169128088726&type=1">album </a>on our Facebook page. It’s also worth watching Ellen’s <a href="http://www.thedailyshow.com/watch/mon-october-17-2011/ellen-schultz">recent appearance</a> on <em>The Daily Show with Jon Stewart</em>.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Friday, November 11, 2011</span> </div> </div> </div> </article> <article> <h1>Retirement Heist steals the spotlight</h1> <p>nhwa — Thu, 29 Sep 2011 19:41:35 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>Today, <em>Morning Edition</em> on NPR featured an <a href="http://www.npr.org/2011/09/29/140344871/retirement-heist-how-firms-trimmed-pensions">interview</a> with former <em>Wall Street Journal</em> reporter Ellen Schultz about her new book, <a href="http://www.retirementheist.com/"><em>Retirement Heist</em></a>. We have already <a href="http://www.pensionrights.org/blog/shining-light-hidden-pension-world">sung the praises</a> of this important work, which details how corporations have exploited loopholes in the law to boost corporate profits at the expense of workers’ pensions, but I am glad to see that it’s getting the national attention it deserves. (In the interest of full disclosure, I should note that Schultz thanks the Pension Rights Center prominently in the acknowledgements.) </p> <p>If you haven’t <a href="http://www.amazon.com/Retirement-Heist-Companies-Plunder-American/dp/1591843332">bought the book</a> already, this interview gives you a taste of what <em>Retirement Heist</em> is all about. Schultz disputes the idea that traditional defined benefit pension plans are a drain on corporate profits or that companies must close their pension plans because retirees are living longer. She notes that prominent companies, such as <a href="http://www.pensionrights.org/newsroom/releases/employees-unions-and-activists-call-verizon-stop-its-pension-freeze">Verizon</a> and <a href="http://www.pensionrights.org/blog/ges-deep-pension-freeze">GE</a>, had fully funded -- and, in some cases, overfunded -- pension plans, but <a href="http://www.pensionrights.org/publications/fact-sheet/pension-freezes">froze</a> those plans to boost their bottom line. Schultz makes the important point that, very often, pension plans end up being scapegoated (and then looted) by companies for poor corporate performance in a stagnant economy. Even more outrageous are instances when rank-and-file pensions are weakened or <a href="http://www.pensionrights.org/publications/fact-sheet/q-serps">manipulated</a> in order to boost executive retirement benefits. </p> <p>Next week, Schultz will be discussing <em>Retirement Heist</em> and taking questions on the <a href="http://thedianerehmshow.org/shows/2011-10-06/ellen-schultz-retirement-heist">Diane Rehm Show</a> on Thursday, October 6, at 11 a.m. (Eastern). To listen on-line, go to <a href="http://wamu.org/">WAMU.org</a>.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Thursday, September 29, 2011</span> </div> </div> </div> </article> <article> <h1>Shining a light on a hidden pension world</h1> <p>kgarrett — Mon, 19 Sep 2011 04:00:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>In a new book, <em><a href="http://www.amazon.com/gp/product/1591843332/">Retirement Heist</a></em>, prize-winning journalist Ellen Schultz has provided the ultimate backstage pass to the world of pensions, with plenty of drama and shocking details. Schultz, a former Wall Street Journal reporter, has woven together a compelling story that reveals how arcane accounting rules, legal maneuvering, and unfair claims procedures have led to the loss of retirement security by millions of American workers. </p> <p>Most compelling for me were the individual stories of benefit cutbacks and denials. There is an inevitable “David versus Goliath” feeling you share with the workers who face these situations. Their cases can take years to resolve and many are not successful, but Schultz has thoughtfully included a number of cases that ended well for participants.</p> <p>As is evident from the subtitle of the book -- <em>How Companies Plunder and Profit from the Nest Eggs of American Workers</em> -- Schultz doesn’t mince words when discussing the problem:</p> <p style="padding-left: 30px;">With perfectly legal loopholes that enabled companies to tap pension plans like piggy banks, and accounting rules that rewarded employers for cutting benefits, retiree benefits soon morphed into profit centers, and populations of retirees essentially became portfolios of assets and debts, which passed from company to company in swirls of mergers, spin-offs, and acquisitions. And with each of these restructuring deals, the subsequent owner aimed to squeeze a profit from the portfolio, always at the expense of the retirees.</p> <p>The publication of <em>Retirement Heist</em> couldn’t be timelier. As <a href="http://www.pensionrights.org/blog/race-bottom">Joellen wrote</a> last week, newly released poverty figures show that the poverty rate in this country has <a href="http://www.nytimes.com/2011/09/14/us/14census.html?_r=1">reached its highest level in nearly 20 years</a>. At the same time, the two of the programs most responsible for keeping people out of poverty – Social Security and Medicare – may be <a href="http://www.reuters.com/article/2011/09/07/us-usa-debt-medicare-qa-idUSTRE7867PE20110907">targeted for cuts</a> by the Super Committee. Unless action is taken, the nation’s $6.6 trillion <a href="http://www.retirement-usa.org/retirement-income-deficit-0">Retirement Income Deficit</a> will increase astronomically. An excellent place for Congress to start to addressing this crisis would be to close the many gaps in the law illustrated by this book.</p> <p>Learn more on the book’s website: <a href="http://www.retirementheist.com/">www.RetirementHeist.com</a>. </p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Monday, September 19, 2011</span> </div> </div> </div> </article> <article> <h1>A race to the bottom?</h1> <p>jleavelle — Wed, 14 Sep 2011 19:16:28 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>New Census Bureau data released earlier this week shows that <a href="http://www.nytimes.com/2011/09/14/us/14census.html?_r=1">more Americans are living in poverty now than at any time since 1993</a>. While an increase might be understandable, given the uncertain economy, the numbers are still staggering. An estimated one in six Americans, or 15.1 percent of the population, is living in poverty. That translates to 46.2 million people – the highest number in 52 years. </p> <p><a href="http://www.census.gov/newsroom/releases/archives/income_wealth/cb11-157.html">As defined by the Census Bureau</a>, the poverty threshold for a family of four in 2010 is $22,114 a year. However, <a href="http://www.pensionrights.org/blog/poverty-and-older-americans-look-behind-numbers">as we’ve noted before</a>, these numbers probably <em>understate</em> the true level of poverty in this country. In any event, if such a high percentage of the population is living in poverty, prospects for a secure retirement look pretty bleak for far too many Americans. </p> <p>The new poverty figures come on the heels of news reports describing the ways that companies are cutting back on the salaries and benefits they provide to their employees. </p> <p>A recent <em>New York Times</em> <a href="http://www.nytimes.com/2011/09/13/business/in-detroit-two-wage-levels-are-the-new-way-of-work.html?sq=detroit&st=cse&scp=1&pagewanted=all">article</a> highlights a two-tier pay scale that has been implemented by Detroit’s Big Three automakers, in which new hires receive lower pay and benefits than long-time employees. Embraced by the automakers, these new wage scales have been lauded for helping the automakers return to profitability. But, for the workers on the lower end of the wage scale, the road to profitability isn’t as clear. According to the article:</p> <p>Some benefits for the lower-tier workers are scaled back as well. They get the union’s traditional medical benefits, but a maximum of four weeks paid time off a year, versus five for the longtime workers. And instead of the guaranteed $3,100-a-month pension a full-paid worker receives after age 60, the new hires have to build their own “personal retirement plan” based on contributions from the company of less than $2,000 a year.</p> <p>This “new personal retirement plan” places the burden of preparing for retirement on the backs of the very workers who are helping the automakers emerge from the brink of financial ruin. <a href="http://www.pensionrights.org/publications/fact-sheet/companies-have-changed-their-defined-benefit-pension-plans">Cutting pensions</a> doesn’t make sense at a time in which the poverty rate for a family of four is at the highest it has been in 28 years.</p> <p>The retirement security provided by a lifetime, guaranteed pension does more than just supplement income in retirement. <a href="http://www.pensionrights.org/publications/fact-sheet/why-people-need-pensions">Pensions lift people out of poverty</a>. People without pensions are more likely to live in poverty than those who have them. A <a href="http://library.constantcontact.com/download/get/file/1102067254806-196/Final+Report.pdf">report</a> released earlier this year by the <a href="http://www.nirsonline.org/">National Institute on Retirement Security</a> states that “more than one-third of households that rely only on individual accounts plans will have income either below or near the poverty line. </p> <p>In a hearing on Tuesday, Senator Bernie Sanders (I-VT) <a href="http://sanders.senate.gov/newsroom/news/?id=B93BF647-25BC-4080-BE46-8D03611F9A6E">noted</a> that the United States has the highest overall poverty rate of any major industrialized country on earth, according to the Organization for Economic Cooperation and Development. With <a href="http://www.workforce.com/archive/feature/benefits-compensation/retirement-plans-morphing-defined-benefits-fade-new/index.php">fewer companies offering traditional pensions</a> and 401(k) plans <a href="http://blogs.reuters.com/reuters-money/2011/08/26/why-401k-plans-will-fall-short-for-most-americans/">proving to be inadequate</a>, we are going to have to <a href="http://www.retirement-usa.org/">do something</a> to address the retirement income crisis in this country. Otherwise, the poverty rate is only going to get worse.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, September 14, 2011</span> </div> </div> </div> </article> <article> <h1>Chilean miners get lifetime pensions, but …</h1> <p>jleavelle — Fri, 02 Sep 2011 14:31:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>A smile came to my face when I first saw the headline, <a href="http://www.cnn.com/2011/WORLD/americas/08/30/chile.trapped.miners/index.html?hpt=hp_bn2">Lifetime pensions awarded to 14 of the trapped Chilean miners</a>. Of course the miners deserve pensions. After all, they were <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/10/12/AR2010101206452.html">trapped underground</a> for nearly three months!</p> <p>But then I remembered that there were 33 miners stuck in that mine. So less than half of them will receive pensions. Apparently, the decision as to which of the miners would receive pensions was pretty arbitrary. According to the article, “the Chilean government chose the miners who will receive the lifetime pensions based on their health, age, and the opinion of the group of survivors.”</p> <p>Umm, that doesn’t sound fair to me. In fact, it sounds downright outrageous. Thank goodness we in the United States have the <a href="http://www.pensionrights.org/blog/erisa-celebrates-its-35th-anniversary-it-clear-there-still-more-do">Employee Retirement Income Security Act</a>, the law regulating the nation’s private pension plans. Such discrimination would never be allowed in this country under ERISA. The nation’s landmark private pension law prevents employers from discriminating against their employees. Right?</p> <p>Not quite. While ERISA does include so-called “non-discrimination rules”, these rules don’t go far enough toward protecting employees from discrimination in retirement plans. Unfortunately, <a href="http://www.pensionrights.org/publications/fact-sheet/q-serps">many</a> <a href="http://www.pensionrights.org/blog/and-rich-get-richer">employers</a> <a href="http://www.pensionrights.org/learn-issues/policy-agenda/agenda-4/j">take advantage</a> of <a href="http://www.pensionrights.org/tags/loopholes-law">loopholes in the law</a> to sidestep ERISA’s rules. </p> <p>Today marks 37 years since ERISA was signed into law. As we’ve noted <a href="http://www.pensionrights.org/blog/happy-birthday-erisa">in</a> <a href="http://www.pensionrights.org/blog/erisa-celebrates-its-35th-anniversary-it-clear-there-still-more-do">the</a> <a href="http://www.pensionrights.org/blog/happy-birthday-erisa-0">past</a>, ERISA has achieved many retirement plan protections for workers and retirees, but there is still so much work to be done. </p> <p>Learn about some of the ways employers can bypass the law:</p> <ul> <li><a href="http://www.pensionrights.org/publications/fact-sheet/facts-about-church-pension-plans">The facts about church pension plans</a></li> <li><a href="http://www.pensionrights.org/publications/fact-sheet/q-serps">Qualified Supplemental Executive Retirement Plans (Q-SERPs)</a></li> <li><a href="http://www.pensionrights.org/blog/and-rich-get-richer">Carve-out pension plans</a></li> <li>Certain provisions of the Center’s <a href="http://www.pensionrights.org/learn-issues/policy-agenda">Consumer Agenda for Retirement Security</a></li> </ul> <p> </p> <p><em>Photo credit: Chilean government under a Creative Commons Attribution 2.0 Generic License.</em></p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Friday, September 2, 2011</span> </div> </div> </div> </article> <article> <h1>Why regulations matter</h1> <p>kfriedman — Wed, 20 Jul 2011 06:01:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>In today’s anti-government political environment, there’s a lot of rhetoric thrown around about the bugaboo “excessive regulation.”</p> <p>Just last week, I heard a spokesperson for Dupont tell a <a href="http://help.senate.gov/hearings/hearing/?id=fa5ab938-5056-9502-5d3d-3a9564103f3c">congressional committee</a> that the decline of traditional pensions was due, in large part, to a “burdensome regulatory regime.”</p> <p>We hear this time and again in almost every area whether it’s pensions, auto safety or the environment. Companies always blame regulations.</p> <p>But as Bob Shull, former Director of Regulatory Policy for <a href="http://www.ombwatch.org/">OMB Watch</a> and currently a program officer at the <a href="http://www.publicwelfare.org/Home.aspx">Public Welfare Foundation</a>, <a href="http://judiciary.house.gov/hearings/pdf/Shull02102011.pdf ">pointed out</a> to another congressional subcommittee recently, “agencies don’t regulate for the sake of regulating. They regulate because they have been charged by Congress…to protect the public and to protect the public’s health, its safety, the environment,” and I’ll add, “its retirement security.”</p> <p>He noted that government regulators are charged with interpreting laws to ensure that they are implemented fairly – in the best interests of consumers as well as businesses. “[W]e use government institutions to pool our collective resources into forces strong enough to act against the larger forces that isolated individuals cannot surmount.”</p> <p>In the retirement income arena this has translated into rules to make sure that: 401(k) fees are transparent so consumers know what they’re charged; companies include lower- and middle-income workers in retirement plans not just higher-paid company officers; and information about plans is understandable and in plain-English.</p> <p>Regulations are necessary. It’s time to recognize them as vitally important safeguards that are critical to a civilized society.</p> <p>Visit the <a href="/learn-issues/regulations">Regulations</a> section of our website to learn about important regulations that help ensure the retirement security of workers, retirees and their families.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, July 20, 2011</span> </div> </div> </div> </article> <article> <h1>PBGC urges bankruptcy court to protect pensions for Harry & David employees</h1> <p>rdavis — Wed, 06 Jul 2011 17:27:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>The <a href="http://www.pbgc.gov/">Pension Benefit Guaranty Corporation</a> (PBGC) recently <a href="http://www.pbgc.gov/news/press/releases/pr11-42.html" title="http://www.pbgc.gov/news/press/releases/pr11-42.html">announced </a>that it has asked a bankruptcy court to continue the company’s defined benefit pension plan, siding with the employees and retirees of Harry & David Holdings Inc. The food and fruit gift basket company is currently in Chapter 11 bankruptcy and is attempting to terminate its underfunded pension plan in order to eliminate the liabilities associated with providing pension benefits for its 2,700 workers and retirees.</p> <p>Harry & David’s plan to use bankruptcy to abandon its pension obligations when the company is planning to stay in business is called “pension dumping.” We have seen it happen before – most famously, with United Airlines, which saddled the PBGC with the <a href="http://www.pbgc.gov/news/testimony/page/tm052009.html">largest pension termination in its history</a> when it reorganized. To make matters worse, after dumping its pension plans, slashing workers’ paychecks, and exiting bankruptcy, United <a href="http://www.lucentretirees.org/docs/pensions%20short%20ceos%20high%207.8.05.htm">handed out bonuses and stock options</a> to company executives. </p> <p>Fortunately, the PBGC’s financial analysts have determined that it is possible for Harry & David to emerge from bankruptcy with its pension plan still intact – making good on the promises the company made to its employees.</p> <p>With this case, the PBGC is taking a stand by saying that financially struggling companies cannot use bankruptcy to automatically escape from their pension obligations. This position not only protects the PBGC, which otherwise would have to guarantee the employees’ pensions, but also protects the employees’ promised benefits that might otherwise be reduced. This is because the PBGC only insures benefits up to a certain <a href="http://www.pensionrights.org/publications/fact-sheet/retirement-plan-contribution-and-benefit-limits">guaranteed limits</a>. </p> <p>Bankruptcy should not be an easily travelled avenue that allows companies to emerge with a completely clean slate. Rather, bankruptcy exists to allow companies to maintain financial viability. </p> <p>In the PBGC’s press release, Director Josh Gotbaum said, "We work to preserve both businesses <em>and</em> their pensions. PBGC doesn't ask a company to risk its business if it can't afford its pension plan, but many companies have gone through bankruptcy with their pensions intact, and we think Harry & David might be one of them."</p> <p>The Pension Rights Center applauds the PBGC for asking the bankruptcy court to make Harry & David do the right thing for its employees. </p> <p>Learn more about the <a href="http://www.pensionrights.org/publications/fact-sheet/federal-pension-insurance-protections-0">federal insurance protections</a> that the PBGC provides and visit its website at <a href="http://www.pgbc.gov/">www.PGBC.gov</a>.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, July 6, 2011</span> </div> </div> </div> </article> <article> <h1>Retirement...What's that?</h1> <p>jleavelle — Fri, 24 Jun 2011 04:00:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>Yesterday I attended a hearing held by the <a href="http://help.senate.gov/">Senate's Health, Education, Labor and Pensions Committee</a>. Called <a href="http://help.senate.gov/hearings/hearing/?id=97f3c177-5056-9502-5dbd-a015fef5bf00">Stories from the Kitchen Table: How Middle Class Families are Struggling to Make Ends Meet</a>, the hearing focused on the all-too-familiar challenges that many of America's middle class families are facing due to the economic downturn. </p>  <p>I was particularly struck by the testimony of Amanda Greubel, a social worker, wife, and mother from Iowa, whose family was hit hard when her hours at work were cut back, resulting in an annual loss of $10,000 in income. Amanda described her family's financial picture and noted that saving for retirement was "not even on the radar" for her family. Fortunately, as state employees, she and her husband, a band director for a local high school, will receive pensions when they retire.</p> <p>Also compelling was the statement of Susan M. Sipprelle of the <a href="http://www.overfiftyandoutofwork.com/">Over 50 and Out of Work Project</a>. Susan's testimony included a <a href="http://vimeo.com/25488585">video</a> featuring people who have lost their jobs and are struggling to make ends meet. Many of the individuals who told their stories in the video have had to <a href="http://www.pensionrights.org/blog/spike-401k-loans-and-withdrawals">dip into</a> their retirement savings to meet their everyday expenses like mortgage payments, groceries, and health care costs.</p> <p>When families can't even meet their basic needs, how are they going to save for retirement? </p> <p>In his testimony, economist Jared Bernstein of the <a href="http://www.cbpp.org/">Center on Budget and Policy Priorities</a> highlighted the important role Social Security plays in the lives of millions of Americans. For people age 65 and older, Social Security accounts for two-thirds of their income. Without this vital program, even more of America's elderly would be plunged into poverty.</p> <p>Yesterday's hearing underscores the need for a system that, along with Social Security, will provide a universal, secure, and adequate retirement for future retirees. Sounds like <a href="http://www.retirement-usa.org/">Retirement USA</a> fits the bill.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Thursday, June 23, 2011</span> </div> </div> </div> </article> <article> <h1>Snail mail or e-mail? The Labor Department wants to know.</h1> <p>jsmith — Wed, 22 Jun 2011 13:05:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>How would you prefer to receive information about your retirement plan: delivered by regular mail on paper or electronically by e-mail? </p> <p>What if you don’t use a computer at work and only have access to a computer at home?</p>  <p>What if your home computer is old and doesn’t work very well, or if you don’t have a printer? </p> <p>Would your answer be different for different kinds of plan documents? Would you rather receive a summary of your retirement plan’s rules in booklet form or online? What about a pension benefit statement or a quarterly 401(k) statement?</p> <p>These are some of the questions the Department of Labor is asking as it reviews its rules for delivery of retirement plan information by electronic means. Current Labor Department rules say that, unless you work with computers daily and have access to your employer’s computer network, you must receive paper copies of plan information <em>unless you give permission for the plan to send you the documents by e-mail</em>.</p> <p>We at the Pension Rights Center think that this is a good rule. It strikes the right balance between keeping plan costs low and making sure that all plan participants and beneficiaries actually receive plan information in a form that they are likely to read and understand. While many people have state-of-the-art computers and printers and have the skills needed to negotiate e-mail attachments and links, many others do not. (See our comments to the Labor Department <a href="http://www.pensionrights.org/sites/default/files/docs/110606_prc_comments_to_rfi_electronic_disclosure.pdf">here</a>.)</p> <p>The push to change the rules comes from employers and financial institutions who want the Department to permit e-mail delivery of retirement plan information to anyone who has access to a computer or has an e-mail address. These groups contend that electronic delivery is not only much cheaper but that it is also more efficient. </p> <p>Some of these groups say that it should be up to the administrator of the retirement plan to determine who will receive information electronically. Others propose that everyone automatically get their information by e-mail <em>unless they that say they want paper copies mailed to them</em>. (See the <a href="http://www.dol.gov/ebsa/regs/cmt-1210-AB50.html">70+ comments that have already been submitted to the Labor Department</a>.)</p> <p>We are concerned that a system that delivers information electronically to anyone with a computer or e-mail address would jeopardize the retirement security of too many people by causing them to miss out on critically important information about their benefits. </p> <p>What are your thoughts about this? For yourself? For family members and friends? Please share them with us by leaving a comment below and/or writing to the Labor Department at <a href="mailto:e-ORI@dol.gov">e-ORI@dol.gov</a>. If you write to the Department of Labor, include RIN 1210-AB50 in the subject line.</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Wednesday, June 22, 2011</span> </div> </div> </div> </article> <article> <h1>Hey, Republicans and Democrats: Are you listening?</h1> <p>nhwa — Fri, 17 Jun 2011 04:00:00 +0000</p> <div class="field field-type-filefield field-field-thumbnail thumbnail"></div><p>On NPR this morning, Morning Edition aired <a href="http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=137241345&m=137241320" target="_blank">a story</a> on the Republican Leadership Conference, which is taking place in New Orleans this weekend. At one point, the reporter interviewed two women who were waiting in line to meet former Arkansas governor Mike Huckabee. </p> <p>The interview includes this brief exchange, which comes at 1:20 in the audio:</p> <p style="padding-left: 30px;"><br />REPORTER: Now they’re looking to hear what the GOP candidates have to say about what these ladies agree is the nation’s top problem: the faltering economy.<br /><br />WOMAN #1: I’m 74 years old, and I’m still working as a nurse.<br /><br />WOMAN #2: And I’m 68. I retired and I went back to work, because I have to work. I need the money. Retirement wasn’t enough.</p> <p><br />My first thought was: These women should add their stories to Retirement USA’s <a href="http://www.retirement-usa.org/stories">story bank</a>!<br /><br />My second was: I hope these activists are telling party leaders and their elected representatives about their retirement situation. Politicians need to realize what’s happening in the “real world.”<br /><br />As policymakers talk about cutting Social Security and Medicare, a <a href="http://www.gallup.com/poll/148058/Lack-Retirement-Funds-Americans-Biggest-Financial-Worry.aspx" target="_blank">new Gallup poll</a> shows that <strong>Americans worry more about having enough money in retirement than any other financial concern</strong>, including paying for medical expenses, paying their rent/mortgage, and paying for their children’s college.<br /><br />It's time for politicians to start listening to their constituents!</p> <div class="field field-type-date field-field-news-date"> <div class="field-items"> <div class="field-item odd"> <span class="date-display-single">Friday, June 17, 2011</span> </div> </div> </div> </article> </main></body></html>