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View Diary: $6.6 Trillion Retirement Savings Deficit Shows 401(k)'s No Replacement for Pensions (47 comments)

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  •  The collapses were due to (11+ / 0-)

    the Reagan administration reduced funding requirements.

    Not because there was anything wrong pensions.

    "What could BPossibly go wrong??" -RLMiller "God is just pretend." - eru

    by nosleep4u on Fri Jan 25, 2013 at 06:42:53 PM PST

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    •  And also because (10+ / 0-)

      bankruptcy law changes (also under Reagan) made it easier to raid pension funds.

      "What could BPossibly go wrong??" -RLMiller "God is just pretend." - eru

      by nosleep4u on Fri Jan 25, 2013 at 06:46:23 PM PST

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    •  The collapse was due to ERISA (3+ / 0-)
      Recommended by:
      Sunspots, Gemina13, Oh Mary Oh

      After the passage of ERISA in 1974, and the origination of the Pension Benefit Guarantee Corporation, major corporations didn't want the enhanced liability or the insurance payments. That was when the transition to 401K plans started.  

      "let's talk about that"

      by VClib on Fri Jan 25, 2013 at 06:51:47 PM PST

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      •  I'd love to hear more about this (2+ / 0-)
        Recommended by:
        Notreadytobenice, Gemina13

        I know ERISA was bad for health insurance, because it made self-insured plans (which many large companies' are, even if they are administered by an insurance company) not liable for damages for medical malpractice. But there's a lot I don't know about ERISA.

      •  Maybe they didn't want it (1+ / 0-)
        Recommended by:
        Odysseus

        but it was 12 years of Republican rule that assured they didn't have to do it anyway.

        For the people, government exists to make sure that they do the right thing whether they want to or not.  Now, are corporations people or aren't they?

        •  cynndara - corporations had choices (0+ / 0-)

          To comply with the new ERISA rules as they applied to defined benefit programs or stop providing pensions and offer defined contribution (401K type) plans or no retirement plans at all. Most corporations over the next decade stopped their pension plans and transitioned to 401K programs. I don't think that members of Congress had any idea that the new law would kill pension plans, but it did. It was a very unintended consequence.

          I am not sure if you are just joking, but in case you aren't the SCOTUS has never declared that corporations are people and has been very clear between the differences of "natural persons" and groups of people like clubs, associations, unions, and corporations.

          "let's talk about that"

          by VClib on Sat Jan 26, 2013 at 12:15:17 PM PST

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          •  Ah, yes. (0+ / 0-)

            These things should come with a snark alert (TM).  But as for the corporations shifting over because they didn't like the terms of the law . . . first, the legal paperwork generally ran a hundred and fifty pages of boilerplate; it was my job to print those suckers out night shift at a law firm.  So smaller businesses might have been overwhelmed by the compliance requirements.  Still, the law could have been implemented with more controls.  Companies didn't HAVE to be allowed to weasle out of their commitments.  The government let them.

    •  Actually, just "Googled" ERISA, and as my Father (0+ / 0-)

      would say, "Here's a fine how-do-you-do."

      The ERISA bill was introduced by a Democrat from Pennsylvania, Rep John Dent.  It was signed into law by Gerald Ford.

      I'm rather skeptical of the "unintended consequences" defense, in most instances.  During my twenty plus years with the feds, I never say any policy proposed, much less implemented, unless every detail was scrutinized (and possible outcome).  Partly that was due to the "CYA" culture in the Dept of Defense.

      At any rate, IMO it is the responsibility of lawmakers to know full well the possible outcomes of their legislation (exceptions might be if a "9-11" type event actually affected the outcome, and it would have been impossible to have foreseen such an event).

      That's why they have expert staff, including but not limited to economists.  And if it's arguably not possible to know (within reason) the effect of such policies, "don't go there."

      I suspect that some of the time the PtB use the "unintended consequences" meme when they enact legislation that they KNOW would be wildly unpopular and/or harmful to large swaths of the American populace.

      At any rate, the situation needs to be fixed.  401K's are obviously no rational substitute for defined benefit plans.

      Mollie

      “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

      by musiccitymollie on Sat Jan 26, 2013 at 01:12:49 PM PST

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