Pension Crisis - Fact or Fiction?
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With all the brouhaha about pension problems around the world, it is worth noting who is being held accountable for the woes and who is identified as being able to implement solutions. The results to date are intriguing to say the least and showcased below. Click to take the pension survey and add your voice. We will run the survey for awhile longer and then report final numbers.
- Nearly 70 percent of respondents strongly agree that a pension crisis looms.
- U.S. Congress (57 percent), board members (50 percent), Chief Executive Officers (43 percent), regulators (36 percent) and plan fiduciaries (36 percent) are identified as responsible for the pension crisis. Write-in answers point blame to lobbyists, Wall Street executives and those "who pushed the 401k lie."
- When asked who can fix things, respondents express faith in U.S. Congress (36 percent), plan fiduciaries (36 percent), regulators (36 percent), governors and other state officials (29 percent), Chief Executive Officers (29 percent) and board members (21 percent). Write-in answers include a preference for a national solution, new regulation, ethical people and the securities industry to step up to the plate.
- Nearly 70 percent of respondents fear a Social Security crisis. One respondent suggests the removal of the Social Security cap so that FICA contributions increase as taxable income goes up.
- Eight out of ten respondents agree that "most people are ill-equipped to invest their own money for retirement planning purposes."
- Only 14 percent of respondents support "generous pension packages" for corporate and government leaders during hard economic times. One person questions the use of the word "generous," adding that "decent pensions for time served" make sense. Another person writes that executives often get paid for failure. Yet another survey-taker said that lumping together corporate and government executives is not a good idea.
My first reaction is one of puzzlement. If certain decision-maker categories are identified as pension "culprits" and then subsequently classified by survey-takers as those likely to solve problems, what is preventing action now and why aren't people upset about supposed inaction?
In a related survey conducted by KPMG, analysts document a loss of purchasing power for many pensioners and a painful hit to the bottom line for UK sponsors. "The lost decade for pensions? " cites "growing life expectancies, disappointing equity returns and higher demands for cash" as some of the reasons that have led to almost a doubling of British defined benefit plans being closed or frozen when comparing 2000 to 2008. Authors of the study conclude that regulations can "help to ensure adequate future private sector benefit provision." While other studies suggest a similar panacea, I only invite readers to ponder whether excess regulation got us into this mess in the first place. Think perverse incentives, subsidized costs and compliance mandates that do not map back to economic reality.
Retirement plans, properly structured and managed, offer a lifeline to employees around the world. In contrast, poor governance could pit Jack against the giant but with no hope of a fairy tale ending.
Once again, let us know what you think. Click here to take this six question survey.











