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Social InsecurityBy Kathleen Jones
With a healthy, strong economy, I figured I could probably work a few more years, at least long enough to pad the old nest egg a bit fuller. The future looked rosy, and from time to time I would play the old “What do I want to do when I retire?” game. But what a difference a couple of years can make! Today, about the only thing left from those glowing dreams of yesteryear is the fact that I’ve achieved my goal of making it to 30 years with the company. The economy has tanked – big time!! My once healthy and robust 401(k) plan is an anemic shadow of its former self. Those other nest eggs? Looks like the fox has raided the hen house and made off with most of them. Job security? What’s that? Massive layoffs have struck many a friend and co-worker in jobs that have traditionally been among the most secure, and the only assurances we have is that the end is nowhere in sight. And now, adding insult to injury, certain elected officials (elected, as in they who are supposed to represent our best interests!) not only want to gut Social Security, but change the way our company pensions are calculated. These proposed changes are potentially devastating to workers in the 40+ age group. For the rest of this tirade…er, I mean, article…I shall limit myself to briefly presenting some facts about these last two issues. Let’s start with Social Security. Some of you may recall that shortly after taking office, President Bush proposed “reforming” Social Security by privatizing the program. Well that didn’t set too well with a lot of folks, and for a while that pot was left on the back burner. But the fire was never turned off, only turned down a bit, and that kettle of fish known as “Privatization” has been simmering away, waiting for the right moment to bubble back up. These days there seems to be some debate as to just what Social Security is supposed to be and do. Back in the 1930s, when our parents and grandparents were young, this country (and the world) experienced a devastating economic disaster known as “The Great Depression.” Unemployment was rampant; poverty was everywhere; starvation and homelessness were the norm for much of the population. But out of the pain and suffering of our country was born the Social Security Act. Now, however, the powers that be want to dismantle this cornerstone of America’s social programs under the guise of “reform,” and turn it from a plan that provides guaranteed returns to its participants, to an investment crap shoot with no guarantees, all under the so-called blessings of "Privatization.” The simple fact of the matter is that Social Security was never intended to make you rich. It’s an insurance program, not an investment vehicle. You want to gain wealth? Then you work hard, and make investments in other plans and enterprises. Social Security is a program that provides families with assistance should a wage earner die or become disabled; it also supplements the income of retirees and pensioners. According to the National Committee to Preserve Social Security and Medicare, “Privatizing Social Security turns a safety net for everyone into a golden parachute for a few.” In December 2002 the President’s Commission to Strengthen Social Security proposed several plans, all involving some form of privatization, and all achieved by siphoning off money needed to pay benefits to those not opting for an individual account. All would expose future beneficiaries of these private accounts “to unnecessary risk and widely varying outcomes in retirement security.” (NCPSSM) Not only do certain parties wish to diminish our Social Security benefits, they would also like to dilute our pensions! Recently the United States Treasury announced proposed regulations that would allow American companies to convert their traditional pension plans to cash balance pension plans without regard to the harm such a conversion can do to long-term employees. Cash balance pension plans can yield very good benefits, especially for younger workers who may hold numerous jobs over the years. But these same plans tend to favor employers at the expense of older workers, especially those who opt for lump sum payouts. And to add insult to injury, if approved, companies converting to cash balance plans will be using formulas that will lower your pension benefits by from 20 to 40 percent or more. Are you 40 or older? Then you’d better watch out! I’m not good at explaining mathematical equations, so I’ll use some examples instead to demonstrate how converting to a cash balance plan can negatively impact your pension. The Congressional Research Service, a nonpartisan branch of the Library of Congress, calculated the following numbers. Perhaps if our lawmakers had to live by the same rules they wish to apply to others, they’d think twice. According to the CRS, House Majority Leader Tom DeLay has currently earned a pension valued at $608,143; in a cash balance plan his payout would be $251,086. House Speaker J. Dennis Hastert qualifies for a Congressional pension worth $540,572; his cash balance payout would be $164,455. Representative Bernard Sanders of Vermont, long an opponent of cash balance pension plans, currently qualifies for a Congressional pension of $416,159; his cash balance pension would be worth $115,850. A few years ago a similar attempt was made to replace conventional pension plans with cash balance plans. The hue and cry was so loud and so strong that a moratorium was placed on any further conversions. Lawsuits alleging that these plans were, in fact, a form of age discrimination were filed, and the charges successfully upheld in court. But now the present administration not only wants to allow conversion to cash balance pension plans, it is actually considering giving tax breaks to companies that make these conversions, and also assures these companies that cash balance pensions will no longer be considered discriminatory against older workers and thus take away our right to sue! If you are independently wealthy, if you are a CEO pulling in seven figures or more a year, or if you just plain don’t care about your pension, then you need do nothing more. Just sit back and let these events run their course. If, however, protecting your benefits, be they Social Security, company pensions, or any of the many issues facing working men and women, then I urge you to write, call or email your Congressional representatives and the White House and tell them you oppose these attempts to take from us – the American workers – those rights and benefits we have fought so hard to obtain.
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It doesn’t seem all that long ago that I was looking forward to celebrating my 30th service anniversary with Ma Bell. I figured that once I got my 30 years in, I could retire whenever I wanted to with full pension and benefits. I had a 401(k) plan through work that was pretty healthy, as well as a couple other savings plans to supplement my pension down the road. And, of course, when the time came, I would be able to collect Social Security.
