Word: pensioners
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Dates: during 1980-1989
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With two of the three legs of the retirement stool wobbly, people are looking more closely at their private pension programs. There are about half a million private employer pension plans that cover more than 75% of America's nonfarm workers over age 25. Unlike Social Security, private pension plans are not directly affected by the problem of the aging labor force because companies build up their employees' retirement funds during the employees' working years. Explains Barnet Berin, of William M. Mercer, a New York-based compensation consulting firm: "The private pension system puts in contributions that...
...Company pension plans, however, have other problems. Most firms invest about 8% of their payroll costs in a pension fund to meet retiree requirements, but some cash-short companies have cut back on pension fund contributions. The result is a shortfall in the amount of money needed to meet pension obligations...
Three of the largest U.S. companies-Chrysler, International Harvester and Bethlehem Steel-together have unfunded pension liabilities that now total billions of dollars...
Seven years ago, Congress enacted legislation to assure that private pension programs will pay workers the benefits they are promised. If a company goes bankrupt, the Government-backed Pension Benefit Guaranty Corporation will make payments. But the failure of a large firm like Chrysler could virtually drain the $332 million now available to bail out private pensions...
...greater problem is that private pensions have not fully faced up to inflation. The Committee for Economic Development, a business study group, warned last month that future retirees may face "insecurity and hardship" unless Social Security is reformed and private pension plans find a way to expand benefits. Said a CED report: "A retirement disaster is on the way early in the 21st century...