The number of workers who receive pensions from their employers has declined precipitously over the last three decades. 84,350 pension retirement plans have been eliminated since 1985, according to a new book by Pulitzer Prize-winning authors Donald L. Barlett and James W. Steele. That decline followed three decades of steady increases in the number of pensions in the 1950s, ’60s, and ’70s, Barlett and Steele found, and the current decline was even steeper than expected.
Most of the defined-benefit pensions were eliminated in favor of defined-contribution 401(k) plans to save costs for corporate employers. And the reliance on 401(k)s, which Steele and Barlett say were originally intended as supplemental retirement programs rather than a primary form of savings, has made American workers less prepared for retirement than before, they told the AFL-CIO:
Steele says there is another number we should pay attention to: $17,686. That’s the median value of 401(k) accounts in 2011. For most working people, the amount in their 401(k) account would pay them less than $80 a month for life.
Corporations from Caterpillar, the industrial machinery giant, to the National Football League have targeted workers’ pensions recently, and they have largely succeeded. Caterpillar froze wages and pensions for its workers earlier this year; the NFL negotiated a plan with its union officials to eliminate the majority of their pensions by 2016. Other companies have taken similar actions.
In 1998, 52 percent of Americans over age 60 received pension payments. By 2010, that had fallen to just 43 percent. Just 15 percent of Americans over 60 received pension payments in the private sector that year, down from 38 percent in 1979. 401(k)s, meanwhile, leave workers more susceptible to economic downturns, subjecting their savings to the whims of the market and increasing their chance of falling into poverty.
Iowa Sen. Tom Harkin (D) proposed legislation this year to create a new, modified pension program that would address America’s retirement crisis, but it is unlikely to become law any time soon.