Pension Today, Gone Tomorrow

The Nation: Private Companies Are Cutting Retirement Plans

(The Nation)  Young people may welcome this change. Change is always for the good, isn't it? The poor things have had their heads filled with talk that by managing their own retirement funds themselves, they will get a better return on their money than Social Security or a company pension. Let's hope they do, although, propaganda aside, the odds are not good.

Regardless, most people will be left adrift in the seas of high finance alone with their 401(k)s or Roth IRAs or whatever retirement account they have chosen for themselves. Now all they have to do is avoid unforeseen, catastrophic bills or develop the kind of self-control needed to save money to put into the account. Once they have gotten it into the account the struggle to know what do with it commences.

For a fee, and often an impressive one, they can hire a financial adviser. It helps to get one who is (a) competent, and (b) not a crook. How does one find (a) and (b)? As soon as that is known, the information will appear in this space.

Employees can also do what are called the safe and sound things, like "diversify" your assets, something easily done if you happen to have an MBA. If not, you might prefer a mutual fund. No problem there. There are thousands of them, and there are even funds of funds. Just close your eyes and pick one and keep your eyes closed until retirement day, when you may peek to see if there's anything there.

The explanation offered by companies terminating their pension programs is the competition. They say the competition's employees are younger and/or the other companies don't offer this benefit. It used to be that corporations used the benefit pension to keep employees and hold down turnover. The rationale for the huge pensions given the top six or seven executives is: That's what it takes to hold on to them.

Today's executives with pensions show no interest in retaining their employees. Everybody below a certain line is replaceable. They would, if the law permitted, make three-quarters of their labor force temporary workers, with no beneficial hooks to keep them with the company.

If that seems short-sighted and antithetical to the long-range good of the company, it probably is, but modern CEOs hang around only long enough to get their money and get out. Their average stay is about five years, and then they're floating out the door on their golden parachutes.