Social security and a defined-benefit pension plan have long been the foundation of a secure retirement. However, use of employer-paid defined pension plans has declined dramatically for non-union workers, in favor of 401(k)s and other investment funds that depend mostly on what employees can save. Union workers are also struggling to retain defined-benefit plans.
According to the Economic Policy Institute, less than 20% of private-sector workers are covered by a traditional pension, and the national savings rate is near zero. So, most Americans will be financially unprepared for their so-called Golden years. Elderly people are also being forced to stay in the workforce later in life – 10% of those aged 65 and older worked in 1985- now it’s 15% and going up.
U.S. Congress and Retirement Security
In 2006, Congress passed the Pension Reform Act, which undermined employer paid defined benefit pension plans by creating new burdensome requirements and has also served to accelerate the shift from defined-benefit plans to defined contribution plans. LIUNA has been pushing for changes to the Pension Reform Act that would strengthen pensions and retirement security for working Americans. Some in Congress have also been pushing cuts to social security benefits under the guise of reform. Millions of Americans rely on social security benefits as their sole source of income in retirement and LIUNA strongly supports strengthening social security rather than reducing benefits.
Public Employee Pensions are Budget Crisis Scapegoat
Public employee defined-benefit pension plans have also been affected by the budget shortfalls which have plagued states and localities. In some cases, the shortfalls have been unfairly attributed to public worker pensions by lawmakers who are looking for reasons to dismantle worker benefits. The truth is that even when the economy was booming, city and state governments failed to make the contributions to the pension funds that they were required to by law. The consequences of these poor financial decisions now harm workers’ retirement security through no fault of their own. Workers have negotiated part of their salary for their pensions as a type of deferred compensation and government employers should not break those promises.
LIUNA. Retirement Security Fact Sheet
LIUNA. Facts and Myths on Public Employee Pensions
EPI. Retirement Security
Center for American Progress. Idea of the Day: Americans Should Be Able to Retire with Dignity
NIRS. Why do Pensions Matter?
NIRS. FAQs About Pensions
NIRS. Public Pension Basics