Is the retirement system headed for a bust?
For much of the 20th century, pensions were as much a part of the employment landscape as the 40-hour workweek. But two stock-market crashes and record-low interest rates since the year 2000 have made the plans much more costly and volatile for even the healthiest of companies. As a result, the move away from pensions to 401(k)-type plans is accelerating, with fewer and fewer employers offering a “defined benefit” plan that specifies what will be paid to a retiree. Advocates of the 401(k) say these “defined contribution” plans are more appropriate for today's workforce, which is more mobile and more interested in flexibility than in the past. Others say that many employees, given much greater responsibility for providing for their own retirements, aren't saving enough for their golden years. The decline of pensions is forcing experts to grapple with tough questions, big and small. If the defined benefit pension is the plan of the past, and defined contribution plans risk leaving workers short of money for retirement, should the plan of the future try to combine the best elements of the two? Others say society needs to rethink how people approach retirement. With workers living longer, should they work longer too?
Clark, Robert L., Lee A. Craig and Jack W. Wilson, “A History of Public Sector Pensions in the United States,” University of Pennsylvania Press, 2003. This history of public pensions in the United States runs from colonial times to the 21st century.
Greenhouse, Steven, “The Big Squeeze: Tough Times for the American Worker,” Alfred A. Knopf, 2008. A veteran New York Times labor reporter details the decline of “the social contract” and its implications for wages, benefits and retirement security.
Hacker, Jacob S., “The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement and How You Can Fight Back,” Oxford University Press, 2006. As part of a broad look at the risks Americans face, a Yale University political scientist details how workers' retirements may be jeopardized through an overreliance on defined contribution plans.
Lowenstein, Roger, “While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis,” Penguin, 2008. A financial journalist-turned-author uses three case studies in the private and public sectors to show how pension mismanagement puts shareholders and taxpayers at risk.
Sass, Steven A., “The Promise of Private Pensions: The First Hundred Years,” Harvard University Press, 1997. The program director of the Financial Security Project at the Center for Retirement Research at Boston College wrote this comprehensive history of pensions while at the Federal Reserve Bank of Boston.
Kozlowski, Rob, “Corporate Pension Plans Mark Sad Milestone,” Pensions & Investments, Feb. 3, 2014, http://tinyurl.com/
Tong, Scott, “Father of modern 401(k) says it fails many Americans,” Marketplace, June 13, 2013, http://tinyurl.com/
Tracer, Zachary, “Prudential Piles on the Corporate Pensions,” Bloomberg Business, Dec. 18, 2014, http://tinyurl.com/
Walsh, Mary Williams, “No Smoke, No Mirrors: The Dutch Pension Plan,” The New York Times, Oct. 11, 2014, http://tinyurl.com/
Reports and Studies
“Corporate Pension Plan Funding Levels Declined in 2014, Reversing Much of 2013 Gains, Towers Watson Analysis Finds,” Towers Watson, Jan. 5, 2015, http://tinyurl.com/
“Pension Benefit Guaranty Corp. Annual Report 2014,” http://tinyurl.com/
Biggs, Andrew G., and Jason Richwine, “Overpaid or Underpaid? A State-by-State Ranking of Public-Employee Compensation,” American Enterprise Institute for Public Policy Research, April 2014, http://tinyurl.com/
Copeland, Craig, “Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2013,” Employee Benefit Research Institute, October 2014, http://tinyurl.com/
Ehrhardt, John, and Zorast Wadia, “Milliman 100 Pension Funding Index,” Milliman, January 2015, http://tinyurl.com/
Munnell, Alicia H., “401(k)/IRA Holdings In 2013: An Update From The SCF,” Center For Retirement Research, Boston College, September 2014, http://tinyurl.com/
Sielman, Rebecca A., “Milliman 2014 Public Pension Funding Study,” Milliman, November 2014, http://tinyurl.com/
The Next Step
Defined Contribution Plans
Epperson, Sharon, “Surge in 401(k) millionaires as balances hit highs,” CNBC, Jan. 29, 2015, http://tinyurl.com/
Nissenbaum, Dion, “Independent Panel Proposes Changes to Military Pensions,” The Wall Street Journal, Jan. 27, 2015, http://tinyurl.com/
Wang, Penelope, “The Extreme IRA Mistake You May Be Making,” Time, Jan. 13, 2015, http://tinyurl.com/
Fletcher, Michael A., “Can insurance companies save public pensions?” The Washington Post, Sept. 11, 2014, http://tinyurl.com/
Monga, Vipal, “Longer Lives Cut Premium to Offload Pensions,” The Wall Street Journal, Feb. 3, 2015, http://tinyurl.com/
Morley, Katie, “Pension errors: the scandal widens,” The Telegraph (U.K.), Feb. 1, 2015, http://tinyurl.com/
Becker, Bernie, “Dems push automatic IRA bill,” The Hill, Feb. 22, 2015, http://tinyurl.com/
Brooks, Rodney, “Some states move to help spur retirement savings,” USA Today, Jan. 27, 2015, http://tinyurl.com/
Harper, Jennifer, “No more ‘ruling class culture’: New legislation would jettison pensions for Congress,” The Washington Times, Feb. 2, 2015, http://tinyurl.com/
Popper, Nathaniel, “Goldman Hired to Manage $2 Billion of New York Public Pension Fund,” Sept. 10, 2014, http://tinyurl.com/
Tergesen, Anne, “A Pension Before Age 40: Are Military Benefits Too Rich?” The Wall Street Journal, Feb. 4, 2015, http://tinyurl.com/
Whaley, Sean, “Study: Many public-sector retirees making more than they did on job,” Las Vegas Review-Journal, Jan. 22, 2015, http://tinyurl.com/
Center for Retirement Research at Boston College
Hovey House, 258 Hammond St., Chestnut Hill, MA 02467
Academic center that produces research on “anything involving money and retirement.”
Employee Benefit Research Institute (EBRI)
1100 13th St., N.W., Suite 878, Washington, DC 20005
Group, backed by corporations and some public pensions and unions, conducts research to encourage and enhance sound employee benefit programs.
1166 Avenue of the Americas, New York, NY 10036
Consulting firm, a subsidiary of Marsh & McLennan Cos., with global employee-benefits practice that publishes studies on corporate pension health.
1301 Fifth Ave., Suite 3800, Seattle, WA 98101-2646
Actuarial and consulting firm that publishes studies on corporate pension health and other benefits issues.
National Coordinating Committee for Multiemployer Plans (NCCMP)
815 16th St., N.W., Washington, DC 20006-4101
Organization of multiemployer pension plans, unions, employers and their associations, as well as fund professionals.
Pension Benefit Guaranty Corp.
PO Box 151750, Alexandria, VA 22315-1750
Federal corporation that insures private-sector defined benefit plans.
Pension Research Council
The Wharton School, 3620 Locust Walk, 3000 Steinberg Hall–Dietrich Hall, University of Pennsylvania, Philadelphia, PA 19104-6302
Academic organization that generates debate on policy issues and employee benefits; maintains a large collection of academic papers on pension topics.
Pension Rights Center
1350 Connecticut Ave., N.W., Suite 206, Washington, DC 20036
A consumer organization that advocates for workers' and retirees' retirement security; its website has a number of fact sheets and reports on companies that have changed their pension plans.
Pensions & Investments
685 Third Ave., 10th Floor, New York, NY 10017-4036
Magazine and website producing news and databases for pension, portfolio and investment management executives.
335 Madison Ave., New York, NY 10017-4605
Consulting company that publishes studies on corporate pension health and other benefits issues.
U.S. Department of Labor
Frances Perkins Building, 200 Constitution Ave., N.W., Washington, DC 20210
Produces and enforces regulations related to the Employee Retirement Income Security Act (ERISA), the federal law governing defined-benefit pensions.