Word: pension
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...even now the social security system depends on the complex of private and public pension plans to provide adequate security for the nation's elderly. But that system also has its drawbacks; Harvard's own pension plan exemplifies the failings of plans throughout the country...
...though the federal government can rationalize the low benefits provided in the form of a social security check by pointing to the supplementary income provided by pensions, one-half of all Americans are not currently covered by any type of pension plan. In addition, many of those who are covered never see a dime of the money they or those employers have put away for retirement, either because of the loopholes in the law or the inadequacies of the particular pension plans...
...Employment Retirement Income Security Act (ERISA) of 1976 has closed many of the gaps by formalizing requirements for pensions and guaranteeing a worker the nonforfeitable right to a pension after 10 years of continuous service (vesting rights). Harvard's pension plan, however, exemplifies the many inadequacies in the system that persist, especially for non-hourly unionized workers...
THOUGH Harvard allows hourly workers to "vest" before the federal minimum of 10 years, the University is by no means generous with its pension system. The University's plan is based on credited service and a final average base wage rate taking into account the worker's social security benefits. A worker who retires after 25 years of continuous service will receive 60 per cent of his "high-five pay" (the highest average of the worker's base wage rate during five consecutive years in the final ten years of service) minus 80 per cent of his social security income...
What this and all social security-integrated pension plans fail to take into consideration is the continuing high level of inflation. Dianne Bennett, former attorney advisor with the office of tax legislative counsel at the Treasury Department, suggests that this is the main argument against any type of integrated plan. She says even if social security were subtracted from 100 per cent of the pre-retirement average high wage base, inflation would still discriminate against the integrated plan recipient...