No one cares more about the sustainability of California’s public pension funds than the teachers, firefighters, school bus drivers and other public workers who depend on them to retire with dignity.
So when “independent” think tanks funded by the Koch brothers echo tea party politicians calling for the demolition of our state’s retirement systems under the guise of “protecting” them, we can’t help but be skeptical (“Unions are hypocrites on 401(k)s”; Viewpoints, Dec. 2).
When Social Security was created in 1935, it was not intended to be the sole source of retirement income for most Americans. The “three-legged stool” was designed with the assumption that a combination of Social Security, personal savings and employer-provided pensions were equal parts of a secure retirement.
The 401(k) plans were created later, after retirement consultant Ted Benna, “the father of the 401(k),” used his interpretation of the IRS tax code to allow his corporate employer to fund savings accounts of executives with pre-tax dollars and matching employer contributions. Benna today says his creation “fails many Americans” and that 401(k) plans were “never intended to cover everyone’s retirement.”
The downsides of 401(k) plans became glaringly obvious during the Great Recession, when Wall Street abuses ravaged these investment nest eggs. And 401(k) plans continue to eat away at retirement security with high fees and poor investment options.
Replacing guaranteed pension with risky 401(k)s has placed a growing number of Americans in jeopardy of either running out of money long before they die, or having to seek employment or public assistance.
Nationwide, the median amount in a 401(k) today is $18,433, hardly enough to weather a few days stay in a hospital, let alone sustain decades of retirement. A recent General Accounting Office analysis found that among households with members age 55 or older, nearly 29 percent have neither retirement savings nor a traditional pension plan.
Recent polling finds that 74 percent of Americans are worried about having enough income in retirement and 86 percent agree that the country faces a retirement crisis. As this problem grows we will witness a growing number of Americans whose golden years will not be spent traveling or relaxing, but competing for jobs at McDonald’s or lining up at food banks.
Instead of focusing on the politically driven agenda demonizing the pensions of public workers, it’s time to focus on the real problem facing our nation: How to ensure that every one of us has a secure retirement.
Carrie Lane is CEO of the California Association of Highway Patrolmen. Dave Low is chairman of Californians for Retirement Security.