‘I don’t have a pension … What makes you so special?’

Cretex worker Arturo Sanchez mans the picket line outside the company's Shakopee facility, where members of Laborers Local 563 are on strike to keep their defined-benefit retirement plan.

Cretex worker Arturo Sanchez mans the picket line outside the company’s Shakopee facility, where members of Laborers Local 563 are on strike to keep their defined-benefit retirement plan.

If your job offers a defined-benefit retirement plan, odds are good you’ve heard it before, maybe even across the negotiating table: Pensions are a relic of the past.

Bolstered by slick marketing campaigns underwritten by Wall Street investment firms, employers have been successful in convincing a generation of American workers they don’t need pensions to have a secure retirement. But a growing body of research suggests the alternatives – 401(k) and other defined-contribution plans – are very risky business, and the U.S. may be headed for a retirement crisis as a result.

A March 2013 report by the New School’s Schwartz Center for Economic Policy Analysis estimated that 75 percent of American workers ages 50 to 64 – those nearing retirement, or so they think – had an average retirement savings balance of less than $27,000 in 2010. Even among higher income brackets, the numbers are grim. Roughly half of retirees-to-be in the top 25 percent of earners have retirement savings balances of only $52,000, the report found.

Of course, that’s nowhere near enough money for a secure retirement, even when combined with Social Security income. In fact, a 2010 study by the Center for Retirement Research at Boston College found an estimated $6.6 trillion gap between the money workers ages 32 to 64 will need in retirement and the money they will have during retirement.

So the next time someone asks why you think you deserve a pension, you might ask them whether they plan on winning the lottery or working into their 70s.

[Related Story: Laborers on strike in Shakopee to protect pension benefits]

Comments

  1. Edward Dijeau says:

    When you have a multi-employer Defined Benefit Pension and it is held and invested by a joint Employer and Union Trust, you may then negotiate a pay amount or pay increase amount and designate where you wish the money should go. On the check, into health care, apprenticeship programs and/or pension Plan(s) etc. These funds, that are placed into a Jointly administered Defined pension Plan, are part of your compensation from the past, present and a promise to continue this plan into the future. When the employer(s) side wants to pull out of the contracted Defined Benefit Pension Plan, because it is a financial responsability, under Federal law, It is up to the Trust to give a complete financial accounting and what “Unfunded liablities” are on the books and what the total value of the assets are. The employers side must bring the pension to 100% funded before transfering it to a newly elected “Union (only)Trust”. This is called a “BUY OUT” of the fiducuary obligation. Since the Joint trust established the benefits retirees get, the joint trust must determine the What part of any shortfall was caused by the investments not performing as expected or the witholding of funds by the employers. Each participating employer, Based on previouse payroles and contributions to the plan, must come up with a “buy out” dollar amount. If a lot of employers have gone out of business, left the country or have gone “non-Union”, you must track down their owners and take them to court to come up with the money to bring the plan up to 100% funded. This leaves current employers with the burden of comming up with whatever can not be collected from those who are not current employers. The best time to do a buy out is when investments are at 100% funding levels and there is no need for a “Buy Out” compensation from the Employers, not durring negotiations when the Market has not fully recovered and the plan is under 100% funded.

    This is defurred compensation that the Laborers have earned and wish to continue to earn.

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