Most Blame Decline in Pensions on Congress

The National Institute on Retirement Security (NIRS) surveyed American workers about their retirement. While I don't find the results of the survey surprising, in general, I did find it interesting how and where the blame for worker's anxiety about their retirement is placed.

Here are some of the highlights of the survey, along with some (probably pithy) commentary:

• 83% of Americans are concerned about their retirement. That is the biggest number that I have ever seen for this statistic.
• 84% say that the current economy is an impediment to their preparations or their ability to prepare for retirement. While this is surely true, this is the first period since the passage of ERISA where employer-provided retirement benefits have been cut so drastically at the same time as the economy has plummeted. In previous recessions (although the recession of about a decade ago foretold how employers would likely react to this one), employer-provided retirement benefits have been much more sacred.
• Only 11% of Americans expect their retirement to include things like travel, restaurants and hobbies. On the other hand, 34% will be happy to just get by.
• Nearly 90% of those surveyed believe the US private retirement system is flawed.
• 77% are of the opinion that the downfall of pensions has made it harder to live the "American Dream."
• Roughly 80% of Americans think Congress doesn't understand how difficult it is to prepare for retirement, while a full 80% think that Congress needs to do more to help Americans to be able to prepare for a secure retirement.

I find the last bullet most interesting. 37 years ago, after many years of debate and revisions, Congress passed, and President Ford signed into law ERISA. That was the dawning of the golden age for pensions in America. Not only did the number of employer-sponsored pension plans increase, but those pensions were far more secure than they had been previously. But, we couldn't leave a good thing alone.

Bring the alphabet soup of laws affecting retirement plans to the rescue, so to speak. REA, passed in 1984 raised pension costs significantly. SEPPAA, passed in 1986, made it more difficult to terminate a plan once you started one, and, combined with the Tax Reform Act of 1986, made certain that the surplus in a pension plan belonged mostly to the government in the event that an employer chose to terminate a plan. OBRA 87 added pointless volatility to pension plans. It also signaled the beginning of the era in which Congress showed that it is far better in choosing reasonable actuarial assumptions than people trained (and certified through examination) as actuaries (of course Congress knows more, they know more about everything). Various laws throughout the 90s and early 2000s created further turmoil. And, all along, the accounting profession also tried to lay claim to thinking that it knows more about pensions than the people with specific training. And, finally, we got the worst named law in history: the Pension Protection Act of 2006. It has done more in a short period of time to ensure that the majority of Americans will not accrue a pension than any law previous to it. Yes, it has done a wonderful job of protecting the PBGC, but as I have said before in this blog, rather than protecting private pensions, it has decimated them.

Well, according to this survey, Americans may not know how it happened, but they do seem to know, or at least believe that the fault lies with the Fools on the Hill (Congress). But, they think they fixed the problem.

And, so it goes ...