IMPORTANT PROGRAMMING NOTE: Back in 2008, I made a presentation about web design for elders at the Gnomedex Conference in Seattle. I met a lot of young, interesting and engaged tech workers there and one of the them was Dave Delaney.
Dave is an expert on digital marketing, social media strategy and business networking, and he hosts a regular podcast, New Business Networking. Yesterday, we recorded an interview about age, blogging and networking online and off.
Dave is smart, knowledgeable and loads of fun to talk with. You can listen to the podcast here at Dave's website. I'm sure you will enjoy it.
Pensions are disappearing from American business. Each year, fewer companies offer them but if that's the case when you take a job, at least you can make other plans for your old age.
But there is something awful happening to people already retired: benefits are being cut and even lost.
That happens in different ways – some legal, some questionable. Pension plans can be underfunded and so run out of enough money to pay all of what's owed to retirees. Bankruptcy can end pensions altogether. The Enron scandal is a famous example - employees have never seen a penny.
Think about that: you planned reasonably well and with a combination of personal savings, Social Security and a pension plan you paid into during your working years, you get by. That combined income might be modest, maybe it doesn't allow luxuries, but you can afford your home, your car and other necessities.
Until one day, you get an announcement that your pension is being cut by – oh, maybe 50 percent. Or perhaps it won't be paid at all anymore.
Now what? Will you lose your home? Will you still be able to afford co-pays for prescription drugs you and your partner need? You scramble to figure out your new financial reality.
This is no small or occasional screwup. It is so common that a couple of years ago, Ellen E. Schultz wrote a highly acclaimed and frightening book about it titled, Retirement Heist, subtitled How Companies Plunder and Profit from the Nest Eggs of American Workers.
Consider what is happening today to state employee pensions in Kansas.
You will recall that the state's governor, Sam Brownbeck, slashed taxes for businesses and high income earners so that now, two years later, tax revenues have plummeted by a quarter of a billion (with a B) dollars leaving gigantic bills that need to be paid and not enough money to do so. Brownback's solution:
”Slash the state’s required pension contribution by $40 million to balance the state budget. But Kansas already has one of the worst-funded pension systems in the nation. The state was also recently sanctioned by the Securities and Exchange Commission for not accurately disclosing the shortfalls,” reports International Business Times.
“Brownback, an icon of tea party economics who was re-elected in 2014, defended his proposal to divert money from the Kansas Public Employees Retirement System (KPERS), telling the Wichita Eagle: 'It’s kind of, uh, well where are you going to go for the funds?'”
Oh, of course. Why didn't I think of that: those old people don't need the pensions they paid into. Who cares if they can't afford to eat.
Just when you think nothing else can go wrong, it does. Remember all that noise last weekend about Congress staying in session overtime to pass the $1.1 trillion spending bill so the government wouldn't shut down this week? The National Committee to Preserve Social Security and Medicare (NCPSSM) explains what else is in that bill that is now law.
"[It] reversed 40 years of federal law protecting retirees’ pensions. The change will allow benefit cuts for up to 10 million workers, many of them part of a shrinking middle-class workforce in businesses such as construction and trucking. There wasn’t a single Congressional hearing on the plan before it was slipped into the spending bill...”
Bad enough, right? Now read the interpretation of that change from the Wall Street Journal. The emphasis is mine:
”Lawmakers and experts, while divided over the merits of the change, largely agreed that it could well be the first of many.
"The measure 'would set a terrible precedent,' said Karen Friedman, executive vice president of the Pension Rights Center, a group that advocates for wider pension coverage and opposes benefit cuts. The bill could encourage similar cutbacks in troubled state and local pension plans, and possibly even Social Security and Medicare, she said.”
It sometimes happens that way with legislation; a limited exception (as bad as it is) is used to grease the skids for expansion to areas where it was not intended.
I'm sure you'll feel much better about about that possibility when you read this, from the same Wall Street Journal story:
“'Facing up to the insolvency is healthy,' said Alex Pollock, a scholar at the conservative American Enterprise Institute. While it is difficult to consider cutting retiree benefits, it is often better than taking the money from other people, such as taxpayers, he said.”
It is a foregone conclusion that the next Congress, which convenes in January and is entirely controlled by the Republicans, will try to cut Social Security and Medicare one way or another. We cannot trust President Barack Obama not to go along. I hope you will be with me, ready to fight back as hard as we can.
At The Elder Storytelling Place today, Henry Lowenstern: Memories of a German Childhood