I knew a guy about 20 years ago who lost his pension. He worked as a hot linotypist – the guys who used to set hot type for the publishing industry, a now all-but-forgotten trade – and his union bailed on him. Poor guy, I thought. What are the odds?
Well, apparently, they're getting better every day. We ran two stories in a row earlier this week, both about the once-sacrosanct notion that your company or municipality could run out of money.
The first stated that the Pension Benefit Guaranty Corp. could go down in flames in a decade if some underfunded multiemployer pension plans, including the Teamsters, don't get their acts together. The New York Times thought it was so important they ran the news as their lead story on page one.
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The second, posted within the hour, reported on a study from hedge fund manager Bridgewater Associates. They warned public pension funds likely would earn an annual return of 4 percent or less in the years ahead. And that could mean bankruptcy for a whopping 85 percent of the funds in three decades.
That's a lot to consider. Will our retirement system create the message to new workers that working for "the man," whether he's in the private or public sector, is a losing proposition? If a worker can't rely on his or her pension, is our society sending out the message that the only road to a secure retirement is to strike out on one's own? To start your own business or run the risks of an empty coffer come time to cash in your chips?
Sure, 401(k)s were conceived to take the pressure off public and private entities saddled with DB obligations. But that's going to take decades. And as for the success of the programs, well, that's another column.
So how did we get here? It's like the cliff's coming fast and we just realized the brakes are gone. I know people who blame the unions. Their reasoning is that a politician's main objective in life is to get (re-) elected and that union bosses speak the loudest of all come contract time. Or that fat pensions make up for better salaries in the private sector. But now that some police officers make $150,000 a year, is it time to reset the game board.
Others blame the private sector for jettisoning pensions so they can put profits ahead of people. Maybe we need to look no further than the Great Recession and realize this problem is most acute for those approaching retirement and will wane after a few decades. Perhaps it's all of the above.
I do know that legislators and business leaders need to huddle, separately and together, to find a suitable balance between profits and the welfare of their workers or both the public and private sectors will decay, in a worst case scenario, past the point of no return.
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