Thirty years ago, 1 in 2 private-sector workers participated in a defined-benefit pension; at companies with at least 100 employees, 84 percent had one. Today, just 1 in 5 private workers has a pension.
Now Pri/Harvey would say the trend is because of shareholders… I would argue that BODs are not listening to shareholders as evidenced by the now mandated non-binding compensation for CEO votes. I don’t think any company has followed through with cutting compensation after a shareholder vote suggests this should be done.
And a proposed solution that does not mandate eliminating pensions altogether.. (Something that will for sure disappoint Pri/Harvey.)
Surely, there’s room for a middle ground, somewhere between no pension at all and one that’s unsustainable.
The stakes are high, because most workers desperately need another retirement vehicle, and most taxpayers won’t stomach another round of financial bailouts. What remains to be seen is whether the corporate world has the imagination to develop an alternative and the public side can muster the political courage for a fix.
There is cause for optimism. Around the country, advocates for working people and businesses are designing new pensions aimed at bolstering retirement without overwhelming employers. In February, at a Washington conference on “re-imagining pensions,” experts described adjustable plans, cash-balance funds and other hybrids.
The common theme was spreading the risk, so if plans didn’t deliver as hoped, the sponsor didn’t bear all the responsibility. In the adjustable model, for instance, a smaller benefit is guaranteed, based on a 5 percent annual return. If investments perform better, retirees get a bump; if not, employers don’t get a nasty surprise.
The beauty of this approach: Workers know the floor on payouts and employers know the ceiling. Everything else is gravy.
Sharing the risk is a good solution.
I’m sure the usual suspects will poke holes in it.
