A\nfavorite question to ask a Democrat in Iowa right now is: \u201cWhat candidate are\nyou supporting in the 2020 Iowa Caucuses?\u201d \n<\/p>\n\n\n\n
I don\u2019t have an answer, yet. I don\u2019t watch debates. Debates, which is a misnomer today, have turned into ratings wars for the media, where the candidates yell at each other and never get to the meat of an issue. How could anyone, with fewer than 3 minutes explain a complex subject. It was much better when the League of Women Voters facilitated the events. The candidates and the questions were civil.<\/p>\n\n\n\n
So,\nI read newspapers, talk to a few followers of certain candidates, and attend an\nevent where a candidate is speaking \u2013 rarely. \nCandidates will tell us what they will do, won\u2019t do, or think they can\ndo. Do any of them listen? Sure, just ask them. Each will tell you what they have heard from\nAmericans.<\/p>\n\n\n\n
As\nfar as I know, none of them have listened to me.<\/p>\n\n\n\n
I\u2019m\na Baby Boomer. I live on my Social Security \u201centitlement\u201d benefits, and two\npensions \u2013 one is very tiny, the other is moderate, it\u2019s about half of what Social\nSecurity provides, but I couldn\u2019t live without it. Yes, Social Security benefits are very\nimportant. Just ask any politician. Some will tell you the Social Security well\nis going to run dry in about 20 to 30 years. Some will tell you it\u2019s solvent\nfar beyond that estimate. This issue is\nan ongoing debatable issue. I may not be\naround when something changes (like having Congress pay back what it borrowed \u2013\nHA!). But my pensions are the focus of\nmy questions to candidates.<\/p>\n\n\n\n
Not\nmany Americans are lucky enough to have a \u201cdefined benefit\u201d pension. <\/p>\n\n\n\n
Defined benefit plans provide a\nfixed, pre-established benefit for employees at retirement. Employees often\nvalue the fixed benefit provided by this type of plan. On the employer side,\nbusinesses can generally contribute (and therefore deduct) more each year than\nin defined contribution plans. However, defined benefit plans are often more\ncomplex and, thus, more costly to establish and maintain than other types of\nplans.<\/p>\n\n\n\n
https:\/\/www.irs.gov\/retirement-plans\/choosing-a-retirement-plan-defined-benefit-plan<\/a><\/p>\n\n\n\n I have never contributed\nto a defined benefit plan in which I have participated. With most defined benefit plans, the employer\nmakes the contribution. It is possible\nthat an employee may contribute, but that\u2019s not the norm.<\/p>\n\n\n\n Defined benefit plans\nare the costliest plans for a business, non-profit or other entity to maintain. About 20-30 years ago, many companies were\nkeeping their defined benefit plans, but began placing new employees on a 401k plan<\/a>. \nThose employees with a defined benefit plan were grandfathered in, while\nthose hired after a certain date were offered the alternative 401k. A 401k plan, described as a defined\ncontribution plan, is less costly for an employer, more costly for the\nemployee, but as any company human resources department will tell you, gives\nthe employee more control over investments, etc. Usually, an employer will match an employee\u2019s\ncontribution into the plan, often up to a maximum 7% of the weekly\/monthly\nsalary. \u201cIn 1975, 62 percent of\nprivate-sector workers participated solely in a defined-benefit plan; in 2009,\nonly 7 percent did, according to the Employee Benefit Research Institute.\u201d <\/p>\n\n\n\n My question to\npresidential candidates, U.S. Senatorial candidates, and Congressional\ncandidates is this: \u2018Once elected, other\nthan relying on ERISA<\/a> (Employment Retirement Income\nSecurity Act) or the Pension Benefit Guaranty Corporation (PBGC<\/a>)\nwhat is and should be your ideas to keep private pension plans and the PBGC\nsolvent?\u2019 (ERISA and PGBC do not cover\nmost government-run pension plans).<\/p>\n\n\n\n Economists are\nprojecting a recession for the near future[1]<\/a>. When companies cannot sell their products,\nwhen non-profits cannot solicit necessary funding, and when service vendors\ncannot meet sales goals, layoffs occur. \nBut one thing former employees never worry about is the pension check\ncoming in every month. A financial hit\non a business or non-profit with a defined pension program may affect the\npension plan\u2019s solvency, while you hear only about the layoffs.<\/p>\n\n\n\n You can lose your\npension benefits overnight. Several\ncompanies have filed for bankruptcy in the past year, including Sears, Toys R\nUs, ShopCo, and Payless. Granted, it\u2019s\nnot likely these companies had defined benefit plans for their employees, but\nif they did, the employees are probably not going to see any financial\nrecovery. Not that many years ago,\nDahl\u2019s Food Stores in the Des Moines Metro area experienced a bankruptcy in\nwhich all employees lost their so-called \u201cguaranteed\u201d pensions. It affects more than employees; it affects\nthe community, as well. <\/p>\n\n\n\n In 1998, CIGNA Corp.\nchanged its defined benefit plan to a cash balance plan. The employees and the plan administrator\nsued. The U.S. Supreme Court, in CIGNA\nv. Amara<\/a>, remanded the case back\nto \u201cDistrict Court to revisit its determination of an appropriate remedy for\nthe violations of ERISA it identified. .\n. . Because the District Court has not\ndetermined if an appropriate remedy may be imposed under \u00a7 502(a)(3), we must\nvacate the judgment below and remand this case for further proceedings\nconsistent with this opinion.\u201d This case\nwas ongoing in 2014, 16 years after the initial change in the CIGNA pension plan. The complexity of the case, and the numerous\nside issues that had to be settled, created costs to the litigants that could\nnot be retrieved. The end result was not\na total win for the employees. The cash\nbalance plan was an actuarial distortion that gave former employees a cash\nsettlement, far less than what they would have received in monthly payments\nover the years. It\u2019s sad that the courts\ndetermined that there needed to be \u201can appropriate remedy\u201d for a situation that\nwas not caused by employees, but by the multinational corporation.<\/p>\n\n\n\n If you depend upon a\ndefined pension plan, you should read this: \nhttps:\/\/www.marketwatch.com\/story\/10-things-pension-plans-wont-tell-you-1315521082086<\/a> Especially if you\nhave a government-funded pension.<\/p>\n\n\n\n Some unscrupulous\ncompanies have been known to raid the employee pension plan to offset a huge\nsalary for corporate management at the highest levels. This usually comes before the company files\nfor bankruptcy, merges with another unscrupulous company, or closes down\nwithout notice. ERISA is intended to\nprovide oversight to pension plans. By\nthe time a company or nonprofit has closed, merged, or filed bankruptcy, ERISA\ncan no longer be of much use. It is the\nPBGC that helps employees when a company\u2019s pension plan fails. <\/p>\n\n\n\n Unfortunately, the PBGC\nis not funded by tax dollars. The\nfunding for this program comes from \u201cinsurance premiums,\ninvestment income, and, for the Single-Employer Program, assets and recoveries\nfrom failed single-employer plans.\u201d It\nis estimated that the PBGC\u2019s \u201cMultiemployer Insurance Program continues on the\npath to running out of money by the end of fiscal year 2025.\u201d The Multiemployer Insurance Program covers\nthose pension programs in which more than one employer joins with others to\nsponsor a plan covered by collective bargaining agreements.<\/p>\n\n\n\n Single-Employer Programs are doing a little better. These programs are sponsored and maintained\nby one employer. However, the \u201cSingle-Employer\nProgram remains exposed to a considerable amount of underfunding in plans\nsponsored by financially weak employers. Plans whose sponsors\u2019 credit quality\nis below investment grade have unfunded liabilities of approximately $175\nbillion.\u201d<\/p>\n\n\n\n All of this news is scary for pension plan participants.\nIf your plan fails, you may receive some relief from the PBGC, but it may be\npennies on the dollar. For example, if\nyou currently receive a monthly pension of $1200, and your company\u2019s pension\nplan fails, you may receive a continuing pension check of $500 a month. If nothing happens in the next few years,\nthere may be no money left in the funds to pay you a penny on the dollar.<\/p>\n\n\n\n Ask all the questions you want about teachers\u2019 pay,\nminimum wage, and equality in the workplace, but don\u2019t let the candidates sway\nyou into believing those are the only workplace issues. Baby Boomer or not, if you depend upon a\npension, you should get to know a little more about it. Learn about high actuarial assumptions, signs\nthat a plan may be underfunded. Even an\noverfunded plan can lead to dangerous raiding by corporate sponsors.<\/p>\n\n\n\n Think of the potential economic catastrophe if you and\nyour neighbors worked for the same employer for years, retired, and suddenly\nlose most of your benefits.<\/p>\n\n\n\n If you don\u2019t have a pension, you still have a lot to\nconsider. Your friends, neighbors, and\nrelatives may be adversely affected if this country enters a period of\nrecession and companies fail. Because of\nInternet shopping, a loss of local small businesses, and the effect of tariffs,\nwe all have something to think about besides the current situation of those\nless fortunate. We may be one of them.<\/p>\n\n\n\n Be ready to ask the tough question: <\/p>\n\n\n\n \u201cOnce elected, other\nthan relying on ERISA<\/a> (Employment Retirement Income\nSecurity Act) or the Pension Benefit Guaranty Corporation (PBGC<\/a>)\nwhat are your ideas to keep private pension plans and the PBGC solvent to\nensure retirees, neighborhoods, and whole communities are not placed in an\neconomic tailspin?\u201d [1]<\/a> https:\/\/www.guggenheiminvestments.com\/perspectives\/macroeconomic-research\/forecasting-the-next-recession<\/a>;\n<\/p>\n\n\n\n https:\/\/thehill.com\/policy\/finance\/431423-three-fourths-of-economists-predict-recession-by-2021-survey;<\/a><\/p>\n\n\n\n https:\/\/fortune.com\/2019\/06\/04\/next-recession-2020-predictions\/;<\/a><\/p>\n\n\n\n https:\/\/www.bloomberg.com\/news\/articles\/2019-08-08\/u-s-recession-odds-pick-up-as-economists-cut-growth-estimates<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" A favorite question to ask a Democrat in Iowa right now is: \u201cWhat candidate are you supporting in the 2020 Iowa Caucuses?\u201d I don\u2019t have an answer, yet. I don\u2019t watch debates. Debates, which is a misnomer today, have turned … Continue reading
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