Bailout The Pension System
It is not a secret that the United States has an inadequate and underfunded pension retirement system. Its about to get much worse! The private and public sectors’ pension plans are suffering terrible losses as a result of layoffs and investment losses. We are weeks away from a new assault on what’s left of millions of pensions across the country.
There are two kinds of pension plans: (1) a defined benefit plan is when workers retire and get a set amount of money each month (such as 80 percent of their highest wage). This was the gold standard many unions won for their members in the post-WWII years. It required employers to set aside enough money to ensure workers would have adequate income when they retired. (2) Starting in the 1980s employers began to reject defined benefit plans as too expensive and moved to defined contribution plans – so-called “modern pensions.”