Compare and contrast what the American worker received under defined pension plans to those incredible shrinking 401(k) plans in place today.
To enrich themselves, financial elites helped to destroy defined pension plans as well as unions, which provide enormous protections for older workers.
As the debate over how to cut federal spending rages in Washington, one idea that will no doubt be raised again as Congress looks for further cuts is a change to the formula by which federal employees contribute to their defined pension plans.
Union negotiators managed to maintain, and improve, a pension plan with defined pension benefits for current workers, but new employees will receive only variable benefit pensions.
As has happened in other states like West Virginia and Michigan, converting from a defined benefit pension plan to a defined contribution plan creates enormous transition costs – something that proponents of 401 k)s are not keen on mentioning – that dramatically increases the unfunded liability of the pension system and severely weakens the retirement security of public employees.
Unfortunately, the law doesn't distinguish between a steel company with 20,000 workers and a doctor's office with 3. A New York psychiatrist set up a defined benefit pension plan for himself in 1988 with the goal of retiring in 1998 at age 65.
As 10,000 baby boomers turn 65 every day, 72 percent of them are currently without the protection of a defined benefit pension plan, which leaves growing numbers dependent on inadequately funded 401(k) and other voluntary (defined contribution) plans to keep their heads above water.
It found those who had been part of a 401(k) or other similar employer-sponsored defined contribution pension plan stood to lose more of their expected retirement income than those who had defined benefit pension plans or relied solely on Social Security, the nation's benefit program for retirees.
They will close regulatory loopholes in areas where the DOL has exclusive jurisdiction, such as defined benefit and defined contribution pension plans.
