I’m STILL planning on writing about the trip to England, as the jet lag recedes. But in the meantime I just saw this.
The Bush administration has proposed sweeping new pension rules that will encourage companies to adopt a type of retirement plan that has been under attack for three years for what critics call a tendency to strip benefits from older employees.
One thing (of many) that’s great about England (and Europe) is generous pensions. But here we have the Bush Administration proposing changing pension rules to allow companies to further screw workers, especially those who are near retirement and have limited options for recovering from the blow.
Let’s look back a little further in time. Corporate pensions used to be much more common for American workers. But in 1981 Congress passed the 401(k) retirement plan scam. (Let’s see, what ELSE did Congress do in 1981, that led to trillion of dollars of debt?) The 401(k) is a “defined contribution” plan, instead of a “defined benefit” plan. The primary “advantage” to workers is they don’t pay income taxes on money they set aside in a 401(k), plus employees can set aside a higher amount per year than an IRA – both of which of course primarily benefit higher-paid workers who have the money to set aside, and who pay higher tax rates. Another “advantage” is that workers decide for themselves where to invest the money – which is why everyone lost so much in the market crash. The benefit to employers is that workers think they have a retirement plan. Meanwhile, instead of setting aside money to provide pensions for workers the employer MAY contribute to the 401(k) (or contribute NOTHING, and can even contribute company stock instead of cash). So instead of the COMPANY setting aside money for the worker’s retirement, the WORKER now shoulders the burden of setting aside the money. 401(k)’s aren’t even insured by the Pension Benefit Guaranty Corporation.
401(k) plans were sold to the Congress as a way to get people to save more for their retirement. What really happened was that many corporations now offer 401(k) plans INSTEAD of pensions! The money many corporations had been setting aside for workers’ retirements instead became corporate profits, which increased the value of their stock, which benefited stockholders, which primarily means the top few percent of the economic ladder – the rich and the very rich.
This is of course the simplified version. But think about it – companies could stop setting aside money for their workers’ retirement, with the workers instead being responsible for setting aside a portion of their income, all couched in language that made people think this would BENEFIT the workers! Meanwhile the money previously going to workers’ pensions instead finds its way to the top of the economic ladder.
I found a good article on this subject here.