|Chief Executive Magazine Wrong on Retirement|
June 2, 2011- NIRS submits a letter to Chief Executive magazine disputing claims about public pensions and questioning executive retirement benefits.
To the Editor:
The article also fails to note that in most states, the majority of pension benefits are paid for with employee contributions and investment returns – not tax dollars. It’s important to note that prior to the Wall Street crisis, the vast majority of public pension plans were in good shape. At the end of the 2009 fiscal year, public pensions in aggregate had pre-funded 80% of benefits not payable until decades in the future. Even though the value of public plan assets has increased 35 percent from their low point, states are acting to ensure the long-term sustainability of pension plans by increasing employee contributions and reducing benefits.
The article ignores the growing panic Americans feel about retirement. As corporations switched from pensions to individual 401(k) plans, the retirement prospects of middle-class Americans have suffered. For example, The Wall Street Journal recently reported that the median 401(k) account balance for near-retirees was less than one quarter of what they’ll need to maintain living standards. Our recent public opinion poll finds that Americans understand that increased access to pensions would improve retirement security.
It’s also curious that one of the companies quoted in the Pension Pickle article has frozen its pension plan for its rank and file employees, yet the executive team continues to receive generous pension benefits. According to Titan Industries’ 2011 Proxy, its CEO will receive a pension, or “Normal Supplemental Retirement Benefit,” of $44,000 a month. Pensions work for corporate executives, but not for their employees, nor for lower paid public workers like police officers, firefighters, and teachers?
A retirement race to the bottom is bad public policy. When millions of private sector workers are unable to be self-sufficient in retirement, it’s inevitable that they will turn to governments or others to help put food on the table. That is precisely why state governments continue to provide modest pensions with an average monthly benefit of about $1,900.
It’s unfortunate that Chief Executive magazine misrepresents the financial state of public pensions while failing to see the real looming crisis – that millions of elder Americans are unable to be self-sufficient in retirement.
Diane Oakley, Executive Director, National Institute on Retirement Security
Download the letter here.