It’s been said that Congress does two things well: Over-react and nothing. While Congress prepares to fiddle with the nation’s pension laws, we are concerned that in their zeal to fix whatever problem they perceive, that they will indeed over-react. In fact the vast majority of pensions in this country are in fine shape, a point we’ve made in this space before. However, there are some in trouble.
The Pension Benefit Guarantee Corporation is a quasi-governmental agency that insures pensions with private sector money. That’s an important point. The money they use to underwrite failing pensions comes from — guess who? Yup, business. And almost half comes from manufacturers. In all, the PBGC insures some 44.4 million participants. In 2004, they pulled in a whopping $1.5 billion in revenues from America’s employers. Not exactly chump change.
First things first: pension plans are voluntarily provided by employers. They are not mandated. Let’s make sure no one loses sight of that most important fact during these debates. If it gets too tough or too expensive, little by little, they will disappear. Congress raised the premiums they charge to American business by 58% — from $19 to $30 per enrollee. That’s a whopper of an increase. Call it what you want, but it’s a tax increase on employers — the same employers who are facing the stiffest global competition the world has ever seen, the same employers who face the highest natural gas prices in the world, the highest legal costs in the world. Same ones.
So here’s the deal: We are asking Congress that while they get busy over-reacting to the pension issue, their goal should be to strengthen — and not to kill – both the defined benefit and defined contribution pension systems in this country. Don’t kill the goose that’s laying the golden nest egg for American workers. Don’t make it too expensive for employers to continue to voluntarily provide pension benefits.
Here’s a link to a great op-ed on the topic by NAM President John Engler in last week’s USA Today, and here’s a link to the Pension Coalition website. You can click here to drop a note to your member of Congress.
No need to weigh in, of course, unless you plan to retire some day.
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