All About Pensions: Status Report

Monday, March 14, 2011

Alicia Munnell, director of the Center for Retirement Research at Boston College, professor at Carroll School of Management, and former assistant secretary of the Treasury for Economic Policy is joined by John Turner, director of of the Pension Policy Center, to kick off the pensions series with a discussion of the state of public and private pensions. 


Alicia Munnell and John Turner

Comments [41]

mc from Brooklyn

In some industires workers are eased or crowded out in late middle age. The worker may be completely willing to work but ageism in the marketplace keeps him/her out.

Mar. 14 2011 07:30 PM
Vlad from Central NJ

@Anon.. how many 'teachers' do you know that stop working at 3 PM? I personally have a few family members that are teachers and it seems that some of them "never" stop working. Whether I visit them or they visit me I never see them without "English papers" or "math papers" that they are correcting religiously.... the other day my son asked me to go pick up a pizza while we were visiting.. they didn't have time to fix dinner.. so I said sure.. As I drove him to the pizzeria he continued correcting his papers... needless to say we didn't talk much that evening... (and that's the norm, not the exception).

Mar. 14 2011 07:02 PM
Stephen from Queens NYC

I know some people jump all over the people that retired after 35 years of work. I am now 60 yrs and I think I can work for another 5 possible 10 years. But that doesn’t apply to everyone. My father worked very hard all his live (he lived to 72) as a construction worker. But after 40 years of hard work his body could not take it. Walking and bending was difficult. He could not enjoy his retirement because he was in pain. I work behind a desk and just the strain on my body at 60 makes me want to retire asap. I know several of my older friends that only enjoy about 2 to 5 yrs (if they are lucky) after they retire. I thought you should enjoy your years after putting in 35, 40 years of work. Having the ability to live longer may not be a good thing.

Mar. 14 2011 06:41 PM
mc from Brooklyn

And of course the DiNapoli name recognition was because he was an "incumbent" in that he already held the office, having been appointed out of the Democratic Assembly to replace the disgraced Hevesi.

Mar. 14 2011 02:31 PM
mc from Brooklyn

No argument from me on that. The unions had their reasons. I still think it's a stretch to think he does their bidding on investing. Also, I think Wilson was probably hurt by the candidate at the top of the ticket, Carl Paladino, whose behavior made him look completely unhinged to many voters.

Mar. 14 2011 02:27 PM
Mr. Bad from NYC

"DiNapoli won by three percentage points—despite opponent Harry Wilson's financial advantage and endorsements from ALL THREE major New York City newspapers: The New York Times, The Daily News, and the New York Post.

It was a hard fought campaign, but DiNapoli's name recognition and LABOR BACKING proved stronger than Wilson's"


Mar. 14 2011 01:57 PM
mc from Brooklyn

John Liu is the city comptroller. The state comptroller is Thomas DiNapoli and yes, he was overwhelmingly endorsed by public unions, particularly AFSCME based on his assertion that he would not privatize his office. Whether or not he does their bidding in pension fund investments--that's a long shot. By his own admission he doesn't really know much about investing which is why he has to contract it out. Some of the past practices of the office have come to grief--see Alan Hevesi.

Mar. 14 2011 01:42 PM
Mr. Bad from NYC


Mar. 14 2011 01:13 PM
mc from Brooklyn

@Diane: the urban dictionary defines an online troll as one who posts deliberately inflammatory commentary. The poster with the self-inflated name "Mr Bad of NYC" has a habit of painting large groups of people with a very broad brush and resorts to name calling when someone chooses to challenge anything it posts. I only respond to it when it addresses me, I do not pick fights with other posters. Note its source is the NY Post, a known anti-union rag.

I do welcome civil debate, I just think people tend to jump to conclusions based on some vague narrative like "union hacks" rather than investigating the actual machinery. Doesn't mean the system is the best it could be by no means.

We do indeed reap what we *sow.*

Mar. 14 2011 01:10 PM
Mr. Bad from NYC

@ Diane

Don't bother with MC, it's a troll just trying to suck you in. It doesn't know that the entire job of the Comptroller is to meet with labor groups and their "hacks" who tell him what to do, our present Comptroller is practically a union rep:

I'm sure he'll extract 2x his usual fee from the unions when he runs for mayor in 2013.

Mar. 14 2011 12:56 PM
Mr. Bad from NYC

Let's not forget something key here, when is the last time you heard of a public sector union agitating for PENSIONS for PRIVATE SECTOR employees? Yes, exactly, never. They want THEIR pension but they don't want anyone else to have one too, do they?

They know there is no "business" operating in the USA today that could provide the salaries, benefits and perks that the state provides to them and still stay in business.

It's part of the grand bargain - everybody gets to soak the taxpayer but don't rock the boat for politicians who want to maintain their business contributions base too. It's a lovely deal for all concerned, except the taxpayer of course.

Mar. 14 2011 12:46 PM
mc from Brooklyn

@ Diane: don't know which "union hacks" or pension fund you are referring to but in NY the state public pension funds have a sole trustee (the state Comptroller) who is responsible for hiring the fund managers and investment consultants. Not a perfect system, to be sure, but "union hacks" are not the ones controlling the investments.

Mar. 14 2011 12:44 PM
mc from Brooklyn

@Diane: it sounds like you are really advocating the unions negotiate a choice for emplyees, then, right? Not to "demand" 401k's for everyone.

Mar. 14 2011 12:34 PM
Mr. Bad from NYC

@ Mike from Inwood

Exactly, couldn't have said it better myself.

@ Robert Pinnell from Sea Cliff, NY

Yes, and why couldn't somebody just invest in TIPS and avoid the market altogether ? Oh wait, the FED. It has been FED policy to screw over the little guy since Greenspan got the job in 1986. Take a look at the graph of US Stock market volatility since 1986 and compare it to the 60 years previous, before MASSIVE deregulation. The reason we're so screwed is because our own government has consistently sided up with big business (finance) to screw us over. There is no solution really, I'm glad you have your pensions but it has nothing to do with anything you could have controlled or chosen to do or not do, just luck.

Mar. 14 2011 12:25 PM
Mr. Bad from NYC

@ Mike from Inwood

Exactly, couldn't have said it better myself.

@ Robert Pinnell from Sea Cliff, NY

Yes, and why couldn't somebody just invest in TIPS and avoid the market altogether ? Oh wait, the FED. It has been FED policy to screw over the little guy since Greenspan got the job in 1986. Take a look at the graph of US Stock market volatility since 1986 and compare it to the 60 years previous, before MASSIVE deregulation. The reason we're so screwed is because our own government has consistently sided up with big business (finance) to screw us over. There is no solution really, I'm glad you have your pensions but it has nothing to do with anything you could have controlled or chosen to do or not do, just luck.

Mar. 14 2011 12:24 PM
Brian from Hoboken

What is going on with these comments about retiring at 50 or after 35 years?!?! What planet does the Teamster live on where he thinks I will have sympathy for someone who retired at age 50? Due to the excesses of the last 30 years of government of my parents' generation, I will be working until I am 65 or 70. Thanks Baby Boomers!

Mar. 14 2011 12:13 PM

Not less risky - but at least the choice is yours. If I control my pension funds, I can invest in fixed, no risk CD, high risk funds or even pull out the cash,pay the penalty and invest in real estate. The point is for good or bad the decision is mine. Now I stand to lose $12,000 a year that was "guaranteed". For good or ill I much prefer to put my financial future in my hands rather than politicial/union hacks.

Mar. 14 2011 12:08 PM
Mr. Bad from NYC

Most 401k's are a scam, that much is obvious but whose fault is it that one can't get a decent return from treasuries these days, who is it that is holding down yields? The Fed. The Obama administration working in concert with big business to artificially re inflate the economy by monetizing the debt.

The funny thing is that in the end these public sector pensioners may well be the ones to get screwed, and I can't wait to here them scream about how inflation is killing them - these public sector unions are greedy parasitic organizations just as malevolent as anything the Koch bros. are capable of, maybe more since they have sabotaged the entire liberal agenda with their "what's mine is mine" mentality.

In the end you reap what you sew, and these unions are legendarily incompetent, corrupt and ripe for the picking. In this SINGLE category the right wing is doing all workers in this country a tremendous public service.

Mar. 14 2011 12:07 PM
Robert Pinnell from Sea Cliff, NY

I am retired with a military pension and social security - both are indexed for inflation so my buying power has been preserved - MUCH better than my IRA which has actually declined in value compared to what I put into it.

Observation: I was a Financial Adviser for a while, and one thing that emerged in my review of many people's finances was that, at age 65, the income ratio (social security / pension) was about 34%/66% but after ten years of retirement it was 75%/25% - clearly demonstrating the value of indexing for inflation.

Mar. 14 2011 12:05 PM
anon from Home of highest taxes, NJ

Does the "top 1%" leave the office at 3 p.m., have the summers off, and will they get to retire at 50-55? I doubt it...

This is not sustainable!

p.s. why didn't you ask about the businesses that are no longer in existence who WERE providing defined benefit plans? That is likely because, due to globalization, they could no longer compete.

Mar. 14 2011 12:00 PM

One of your guests said that it's only new companies that have 401k p lans instead of pensions. Where has she been for the last twenty years? The company I worked for—a very old company—changed twenty years ago, as did my wife's. The standard cliche joke about a 401k is that it should be called a 201k. A good portion of my 401k disappeared during the tech meltdown (with no sea water to cool it off available.)

Mar. 14 2011 11:58 AM
mc from Brooklyn

@Henrietta: the fund is taken over by the Pension Benefit Guaranty Corporation, a federal entity, and that entity pays the beneficiaries, usually pennies on the dollar.

Mar. 14 2011 11:58 AM
Mike from Inwood

Brian's claim that people who want to re-evaluate public sector are motivated by a sense of 'my pension is gone, so theirs should go too' is incorrect. Public sector employees are a huge number of people who will only be motivated (politically) to get behind pension and health care reform when they are in the same boat with the other tax payers. Until then, private sector workers are supporting a large block of people who will not be interested in reform.

Mar. 14 2011 11:58 AM
Mr. Bad from NYC

Here we go again with the Public Sector Union propaganda, yes all us non public worker's are bad people because we don't want to pay for a lavish retirement for public employees, we're the bad guys now huh? Public sector unions will bankrupt public finance and force us to raise taxes on everyone, just like in CT and NY eventually. Thanks for ruining state economies all the while talking out both sides of your mouth about worker "solidarity". Haven't we had enough of this ridiculous argument? As the guest said ALL of the private companies that provided pensions went BANKRUPT trying to compete with globalized companies employing cheaper labor - a trend which will not reverse. But the public sector employees want their tax dollar$, whether times are good or bad, whether they deserve them or not. Nobody cares for these greedy organizations, and public opinion is NOT turning towards these groups, please be honest.

Mar. 14 2011 11:57 AM
Nick Lento from NJ

Throwing trillions into equity markets to fund pensions is a giant scam.

The "smart money" simply gets fat off of the rising prices...then sells off, leaving the pensioners shafted. Then they buy back the equities at bargain basement prices.

How many times does this pattern need to repeat before we figure out the scam?

What we need is real progressive taxation and Social Security that allows for a decent standard of living for ALL Americans.

The whole economy needs to be taxed as it grows and that growth needs to be based on real productivity not just the fake "booms" of equity markets.

The richest 400 Americans own more than the lower 50% of the rest of us. That is not sustainable. The rich can manipulate the markets....and that's exactly what they do.

Mar. 14 2011 11:57 AM
mc from Brooklyn

@Diane: On what do you base the assertion that a 401k is less risky than a defined benefit pension?

Mar. 14 2011 11:53 AM
Karen from Manhattan

When I was an assistant professor at a state university in New England, I saw the writing on the wall regarding pensions. After an event I won't go into, I understood that the Governor of my state could take that money and use it for other purposes, such as filling a temporary budget shortfall. So a few years later, when my university offered faculty the opportunity to leave the state pension and invest our retirement dollars in TIAA-CREF, I left the pension program. I'm not sorry I did. I'm still working, but am approaching retirement age.

Mar. 14 2011 11:53 AM

My question is, what are other economies with even LARGER aged and retired populations, such as Europe (particularly Germany) and Japan doing to care for their even larger aging populations? Is there anything to be learned from them?

Mar. 14 2011 11:53 AM
Barbara from Monmouth Beach, NJ

Yes, the 401(k) is cheaper for the company. When my company switched us from a defined benefit plan to a "cash balance plan" (an alleged cash equivalency), not only did they NOT increase our wages, they also did NOT give us the actuarial equivalent value (which at retirement could be rolled into a Rollover IRA) -- effectively robbing us of our pension value -- and leaving me, already in my mid-50's at the time without time to catch up. Now I'm 64 without adequate retirement savings even tho' I maxed my 401(K) during my working years when it was available (and my IRA's too).

Mar. 14 2011 11:53 AM
Mike from Inwood

The economist that claimed defined benefit pensions have driven companiesout of business is full of it. Sure, there may be a couple of instances, but older companies have had a longer time to go out of business. Older companies that have not gone out of buisness have still converted to the cheaper 401k plans.

Mar. 14 2011 11:52 AM
Brian from upper west side

Not to diminish anyone's hard work -- teachers, least of all -- but in response to the caller who got to retire after 35 years of work, it seems a little absurd that an adult with a life expectancy of nearly 80 years would work for only 35 of them. We unfortunately need to renegotiate the social contract to accommodate soaring life expectancy and the expanded capacity to do productive work, which really is a very very good thing in the long run.

Mar. 14 2011 11:52 AM
Dick Raskin from Mount kisco

I think if you actually asked employers who changed from defined benefit plans to defined contribution plans you need to blame congress from over regulation.

The rules disallowing overfunding in good years requiring cathcup contributions in bad years preventing employers from removing early retirement incentives made these plans really unattractive.

Mar. 14 2011 11:51 AM
red from eastchester

Who remembers the remark of John Steinbeck on the 50th anniv of the Depression: "I had no problem with the depression myself; I had spent decades preparing for it." Good Dutch Uncle advice for today.

Mar. 14 2011 11:50 AM

It is an economic impossibility for a worker, no matter how prudent and frugal, to possibly save out of their salaries a sufficient amount, even with prudent investments, to sustain himself or herself throughout old age, and particularly now as life spans is radically increasing. How individuals, or societies as a whole, provide for their aged is a topic not being holistically addressed.

Mar. 14 2011 11:49 AM

If public employee unions were truly on the side of the employee they would be demanding 401K for new hires. Now that we are seeing how at risk these public pensions that would be the responsible reaction. This will not happen, neither the Unions or politicians want to give up control of these billion dollar funds. What security is your guest talking about. After being retired for years nypd pensioners are facing a $12,000 cut per year. At least with 401k you are in control of your future.

Mar. 14 2011 11:48 AM
Vlad from Central New Jersey

I'm retired with a defined benefits plan and an IRA.. and collecting Social Security..
My Defined Benefit plan, when I first retire 13 years ago was giving me 1200 a month to live on... Today, it only gives me $600 a month.. the other 600 pays for my Medical coverage... This is after working for 28 years at a major telecommunications company. I'm drawing on my SS now because of my disability.. and fortunately have not tapped my IRA yet.

Mar. 14 2011 11:47 AM

I am receiving payments from my defined benefit pension but am wondering if these plans are protected from companies defaulting or going bankrupt ala Enron. Is there a difference if you are already receiving payments vs not yet eligible to receive your pension?

Mar. 14 2011 11:47 AM
Kevin from Brooklyn

What types of workers are most likely to save enough for retirement? For example, do people in business save better than those in retail.

Mar. 14 2011 11:44 AM

Plan on a 5% average return from your investments- any more is fiction (3% inflation adjusted). Too many pension funds assume 7-8%.

Mar. 14 2011 11:41 AM
John from NYC

Can you please ask the guests about the NYC civil service employees who work extensive overtime for the last few years of their respective careers and this pay is included in the calculation of their respective pension. How is such a pension system sustainable? Do they know if other civil service pension systems in other states and localities have such a pension structure.

Mar. 14 2011 11:05 AM
landless from Brooklyn

The US needs to invest in children and infrastructure instead of subsidizing the financial industry with pension contributions. A strong economy and full employment would better provide for retired seniors instead of this fear-mongering economy that denies children and young families economic opportunities. A symptom of the distortion is how much money is spent on the last two years of life instead of the first two years of life; all because of government money. There are many examples.

Mar. 14 2011 10:00 AM

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