Word: pension
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...universal replacement to the pension, by the consensus of the Bush Administration, Congress, Wall Street and corporate America, is the ubiquitous 401(k). As Bush explained at a gathering at Auburn University in Montgomery, Ala., earlier this year, "When I was young, I didn't know anything about 401(k)s because I don't think they existed. Defined-benefit plans were the main source of retirement. Now they've got what they call defined-contribution plans. Workers are taking aside some of their own money and watching it grow through safe and secure investments...
...another, most succumb to the temptation to cash out their 401(k)s and spend the money, a practice hardly reflective of a serious retirement system. Today $2 trillion is invested in those accounts. But to understand why the 401(k) is no substitute for a defined-benefit pension, look beneath that big number. Earlier this year the airwaves crackled with announcements that the value of the average 401(k) had climbed to $61,000 in 2004. Noticeably absent from many accounts was any reference to the median value, a more accurate indicator of the health of America's retirement...
...affluent citizens will have two options. They can join Joy Whitehouse in the can-collection business, or they can follow in the footsteps of Betty Dizik of Fort Lauderdale, Fla., who is into her sixth decade as a working American. She has no choice. Dizik did not lose her pension. Like most Americans, she never had one, or a 401(k). After her husband died in 1968, she held a series of jobs managing apartments and self-storage facilities, tasks that brought her into contact with the public. "I like working with people," she said. But none of the jobs...
Congress's role has been pivotal. Lawmakers wrote bankruptcy regulations to allow corporations to scrap the health insurance they promised employees who retired early--sometimes voluntarily, quite often not. They wrote pension rules that encouraged corporations to underfund their retirement plans or switch to plans less favorable to employees. They denied workers the right to sue to enforce retirement promises. They have refused to overhaul America's health-care system, which has created the world's most expensive medical care without any comparable benefit. One by one, lawmakers have undermined or destroyed policies that once afforded at least the possibility...
...process has accelerated dramatically this year. Two major U.S. airlines--Delta and Northwest--turned to bankruptcy court to cut costs and delay pension-fund contributions. This followed earlier bankruptcy filings by United Airlines and USAirways, both of which jettisoned their guaranteed pension plans. Then on Oct. 8, the largest U.S. auto-parts maker, Delphi Corp., filed for bankruptcy protection, seeking to cut off medical and life-insurance benefits for its retirees. Delphi's pension funds are short $11 billion. To Elizabeth Warren, a Harvard law professor who specializes in bankruptcy, this is just going to get worse, as ever more...