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demise of the private pension plan | | |
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Well, it's hard to know what our
president's goal really is. Maybe pension plans don't fit in with
his vision of an ownership society. It's a vision that the president
has to like because, quite frankly, he already owns a lot of stuff.
According to financial disclosure forms he released earlier this
year, our leader owns a 1,583-acre ranch worth between $1 million
and $5 million, and a tree farm valued at about $600,000. On top
of that he has about $5 million in Treasury notes and $1 million
in CDs and checking and money market accounts. And after putting
in eight years at the White House, the president will get, in addition
to lifelong Secret Service protection, a nice big pension check
every month.
I'm not saying he didn't earn all this stuff, but
I wonder if he's in the best position to judge how important a pension
check may be to the average Jane and Joe. I also wonder why he flip-flopped
on the pension fund issue, first loosening the restrictions and
now gunning for tightening them. To push for laws that make it tougher
for businesses to offer pension plans may take a load off corporate
America (though, incidentally, companies do get a big tax deduction
for money they put into these plans), but the demise of pension
plans will put a lot of pressure on workers.
The
pension system will continue to live on in the public sector, no doubt, but what's
being done to address those colossal deficits? The accounting rules that govern
these plans are even looser than those of private plans. "We believe that
public plans may be using an artificially high discount rate in their liability
calculations," says Lance Berg, a spokesman for Barclays Global Investors.
(Remember: high discount rate, less funding required.) There
is no agency to protect or police public plans. The backup plan is that taxpayers
will have to pay for the shortfalls, whether now or in the future. For
those of us who lack traditional pension benefits -- if we're unable to find government
jobs -- we have no alternative but to create our own pension funds. We can do
that by stockpiling a wad of assets. Then we can create our own pensions by using
these assets to purchase immediate annuities that guarantee an income stream for
as long as we live. Of course, the tricky part of that
plan is accumulating a big enough wad of assets. But that goes hand in hand with
the vision of an ownership society, which in this case means: You're on your own.
Longtime financial journalist Barbara Mlotek Whelehan
earned a certificate of specialization in financial planning.
If you have a comment or suggestion about this
column, write to Boomer
Bucks.
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