Very interesting editorial
Jim >> >> An editorial about "Pension Envy" from the St. Louis News >> >> Is it "reform" or a green-eyed monster? >> Pension envy >> Posted: Sunday, July 18, 2010 >> The Russian word zavist, roughly translated, means envy of the meanest, most >> black-hearted kind. >> In his 2003 book, "Envy," scholar and critic Joseph Epstein relates a joke >> of the sort that Russians tell on themselves that perfectly captures the >> meaning of zavist: >> "An Englishwoman, a Frenchman, and a Russian are each given a single wish by >> one of those genies whose almost relentless habit it is to pop out of >> bottles. The Englishwoman says that a friend of hers has a charming cottage >> in the Cotswold's, and that she would like a similar cottage, with the >> addition of two extra bedrooms and a second bath and a brook running in >> front of it. The Frenchman says that his best friend has a beautiful blonde >> mistress, and he would like such a mistress himself, but a redhead instead >> of a blonde, and with longer legs and a bit more in the way of culture and >> chic. The Russian, when asked what he would like, tells of a neighbor who >> has a cow that gives a vast quantity of the richest milk, which yields the >> heaviest cream and the purest butter. 'I vant dat cow,' the Russian tells >> the genie, 'dead.'" >> Lately, whenever we read of another attempt to "reform" pensions, we think >> of the Russian's cow. Two out of every three private-sector workers in >> America no longer are covered by traditional pension plans. Such "reform" >> has contributed to a crisis in retirement security. >> Social Security will pay most of us about a third of what we made before >> retirement. Most Americans - 90 percent by some estimates - aren't saving >> nearly enough money to make up the difference. >> But instead of changing that - fighting to salvage pensions, pushing for >> reforms in retirement savings funds and insisting that policymakers don't >> sell out workers - we want to spread the misery. The guy with a pension? We >> want his cow dead. >> In June, machinists at Boeing Co. made noise about going on strike over the >> issue of pensions. Instead, the workers agreed that employees hired after >> 2011 would get an "enhanced 401(k) plan" but not a pension. >> Before that, it was auto workers whose pensions and health benefits who were >> blamed for the industry's troubles. Before them, it was airline workers who >> saw pension plans gutted by bankruptcy cases. Before them, it was steel >> workers whose pensions, it was said, were the reason American steel couldn't >> compete with foreign imports. >> There is some truth to these claims. Globalization changed the calculus for >> both workers and industry. In the long view of history, the window for >> retirement security may have been open for only 50 years or so. >> Before World War II, pensions were almost unheard of. Indeed, before the >> Social Security Act of 1935, old-age security was considered the >> individual's problem. If there was no family to help, older Americans often >> lived in abject poverty. >> With prices and wages frozen during the war, pensions were a benefit that >> companies could offer to attract and keep employees. For much of the next 40 >> years, Americans could count on working a lifetime for the same company and >> retiring with a pension and a measure of comfort. >> And because state and local governments couldn't compete with private >> employers on salary, they tried to make it up by offering more generous >> pension plans. Teachers, cops and other government employees took low >> salaries in return for a comfortable - and sometimes early - retirement. >> All of that began to change in 1974 with the passage of the Employee >> Retirement Income Security Act. It was intended to make pensions more secure >> and to allow individuals to set aside tax-free income in "individual >> retirement accounts." It was shot through with loopholes that employers >> began to exploit. >> Four years later came the Bankruptcy Reform Act of 1978, which allowed >> companies to shed pension obligations through bankruptcy. That same year >> brought a new subparagraph to Section 401 of the Internal Revenue Service >> Code. >> Subparagraph (k) originally was intended to allow wealthy people to shield >> more of their income for retirement. Instead, the now-famous 401(k) account >> became the magic bullet. People could take control of their own retirements. >> Wall Street could make fortunes in management fees. >> For the diligent and prudent, it worked fine, at least until the stock >> market collapsed. Companies hit hard times and reduced or stopped making >> matching contributions. The average 401(k) has bounced back strongly over >> the last year, but as of March 31, the average balance was $66,900, >> according to Fidelity Investments. >> If personal savings and Social Security are all he's got to work with, a >> person will need six to eight times that much to have $50,000 a year on >> which to retire. >> But some people have it better. More and more, they are public employees. >> They still have pensions. They have used political and electoral clout to >> keep them even as private-sector pensions went the way of the dodo. >> They are the ones with the cows that a lot of people want dead. And because >> they're paid with tax dollars, they're the ones who are the target of many >> pension "reform" efforts. >> The Missouri Legislature just eliminated defined-benefit pensions for new >> employees who join the worst-paid state work force in the nation. The city >> of St. Louis is taking dead aim at the pension funds of its firefighters. >> The state of Illinois , which is in de facto bankruptcy, has been borrowing >> billions to meet its pension obligations. >> The average retired Illinois state employee gets a $22,593 pension. Many, >> particularly educators and state officials, do far better. One retired >> University of Illinois doctor gets more than $460,000 a year. In 2009, 13 >> state troopers retired on more than $100,000 each, according to pension >> critic Bill Zellick. >> But for everyone doing way better than average, many do far worse. And >> because many public employees don't pay Social Security, it's often their >> entire retirement kitty. >> We're all for reforming the excesses. But we ought to do it fairly for sound >> economic reasons, and not just - as the Russians would put it - out of >> zavist. >
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