Bloomberg reports that Congress has included a provision in the annual spending bill that could hurt people who receive pensions. The new law could impact as many as 1.5 million retirees and result in benefit reductions by as much as 50%. The reason, as always, is that the funds will not be able to pay promised benefits. The report does not examine why this problem exists.
Pensions were supposed to be funded and relatively secure. A loss of 50% sounds like the exact opposite of security. What happened to the money that workers invested? What happened to the employers’ contribution, which was supposed to be part of the employees’ compensation? Rather than investigate the problem and fix it, our good representatives in DC are do what they do best: Screwing working people.
Postscript: I've heard radio reports today saying that some "liberal" Democrats and union officials support the new law because getting half a pension is better than getting no pension. I wonder how legislators would feel if their pensions were cut, especially the double dippers who make $150,000 or more a year. Why are so many people disgusted with politics? This story is one good reason, especially when it comes with a bill that promised to backstop risky investments by our too big to fail banks. The investor class is protected. The working class -- let them eat . . . whatever they can find in a dumpster.
The Washington Post has announced changes to its pension plans. Current employees will have to find some way to fund their retirements. What’s worse is what will happen to those who already have retired. Steven Mufson of The Washington Post writes: “The changes will hit hardest at employees hired before 2009 who could plan on receiving pension payments based on their income and years of service. Each of those employees could see scores — or hundreds — of thousands of dollars less over the course of a retirement. More recent hires do not have traditional pension plans.”
I understand that the newspaper business, like other industries, has to adapt to being smaller. A friend of mine who worked for the Chicago Sun-Times had his pension cut. However, if a pension fund was properly funded, why are such cuts necessary? Every time a company or unit of government cuts benefits to retired people, the excuse is one of necessity. What happened to the money that the employees and the company contributed to the fund? Why do retired employees pay the price instead of executives and stockholders? We need to start asking such questions.
Three cheers to Laura Clawson of Daily Kos for informing her readers of this story, which for retirees is more than a story – it’s a tragedy.