We work hard for much of our lives with the hope we will be able to retire and live out the golden years of our lives in relative comfort and ease. A lot of salt-of-the-earth people in Arkansas spent decades on the front lines of labor in the 20th century working under terms of labor contracts that included guaranteed payments in retirement. The system is supposed to help prevent individuals from falling into situations of unmanageable debt.
But as many have seen in the early years of the new century, economic growth isn’t the juggernaut we believed. Pension plans have suffered. Healthcare benefits have started to be cut. Many have had to turn to credit to survive. There’s a significant need for debt management and relief.
Even some plans set up to deliver those guaranteed retirement payments are in trouble and face possible insolvency. That’s sparking moves in Washington for changes that could result in pension payment cuts for as many as 10 million people.
Such benefit cuts haven’t been allowed since the federal Employee Retirement Income Security Act was passed in 1974. But that law is due to expire in 2014, so lawmakers see this as a time to make changes to shore up the ailing pension plan system.
One proposal that is being pushed by a coalition of labor unions and employers would allow trustees appointed by those groups to cut payments to some retirees to as low as about $13,000, regardless of what was agreed to previously. This would apply specifically to ailing multiemployer plans which are typically found in industries such as trucking, construction or the retail food sector.
Supporters say this is needed to resuscitate the entire pension plan system. They argue that cuts now will hold off the need for deeper cuts later.
Advocates for retirees are urging caution. The Pension Rights Center in Washington says the proposed changes fix things on the backs of current pensioners who can least afford the cuts. Center officials say Congress would do better to look at other alternatives first. And, they say if cuts are still deemed appropriate, the law should ensure that the retirees affected have a say in what happens.
As one recently retired trucker puts it, “Let’s come up with a plan that doesn’t trash the retirees and put them in the poorhouse.”
Source: The Wall Street Journal, “Pension-law proposal would hit some retirees,” Kris Maher, April 15, 2013