Two stories today show just how tenuous more and more Americans’ retirement security is becoming.
USA Today reports that the Pension Benefit Guaranty Corporation – the government’s insurer of corporate pensions – “has moved from about a $10 billion surplus in the late 1990s to a $23 billion deficit in its single-employer insurance program.” The PBGC “estimates underfunding in [America’s overall] pension system has reached a record $450 billion.” In other words, companies are refusing to adequately fund their pension, risking more meltdowns a la. United Airlines.
Meanwhile, the LA Times reports that the Securities and Exchange Commission “has found that many pension and 401(k) consultants receive large hidden payments from the investment firms they recommend to retirement-plan clients.” That creates massive conflicts of interest, whereby consultants may be urging pension administrators to put workers’ retirement money in investments the consultant has a financial stake in.
Despite these problems, corporate America is agressively resisting serious reforms. The ERISA Industry Committee, which lobbies for corporations on pension issues, recently sent a letter to Congress urging lawmakers to vote down legislation forcing them to contribute more to the PBGC. These companies have no interest in protecting workers, and instead want taxpayers to foot the bill when things go wrong (think S&L bailout). Let’s hope Congress, however, keeps corporate America’s feet to the fire and makes these companies fulfill their promises to their workers.