We have a retirement funding crisis and if urgent action isn’t taken, the consequences will be disastrous.
I’m not referring to Atlanta employee pensions, but rather the 401(k) plans that most private-sector workers have been forced into. These individual plans have been a spectacular failure, with studies showing that, at age 65, the average worker’s account contains only 23 percent of the amount necessary to retire. By contrast, the vast majority of pension funds, including Atlanta’s, are relatively well-funded.
Pensions are collective retirement plans that provide advantages such as open investment horizons that yield higher returns and mortality pooling to prevent over-allocation of assets. Experts will tell you that pension plans are the most cost-effective way to provide any given level of retirement benefit.
The only ones benefiting by the move from pensions to 401(k) plans are the financial services industry, which stands to pocket hundreds of billions in increased fees and investment churning. During the George W. Bush presidency, Wall Street tried to move Social Security to these individual plans. Having failed in that effort, the financial sector is now going after the next largest pot of retirement funds — public employee pensions. To do so, they’re funding right-wing think tanks and opportunistic politicians to gin up hysteria over the big dip in funding levels caused by the 2008 market crash.
The proposals to move Atlanta employees to 401(k)-type plans are tragically misguided and cruel because they deny workers the benefit of their pension plans after it’s too late for them to recover with individual investment accounts. Economically marginal firefighters, police officers and civil servants would see their retirement income gutted. Modest life plans to retire, pay off a mortgage or send kids to college would be upended.
It need not be so. If allowed to do their work, Atlanta’s pension funds will recover, annual contributions and funding levels will return to historic norms and Atlanta’s contractual commitments to employees can be honored.
Atlanta’s employee representatives will continue to work with the administration and City Council to craft proposals to save taxpayers’ money, restore retirement plan funding levels and protect our members’ legal rights. We will also remind policymakers that most decisions made in haste turn out badly.
Most private-sector workers have been divested of their retirement security by moneyed interests and ideologs. Now those very same players have redirected wide-spread resentment over this condition away from themselves and toward public-sector workers, including even teachers, most of who still have modest pensions.
Instead of falling for this con, workers should organize and demand public policies that restore employer-provided pensions to the private sector.
What we should not do, is accept old-age destitution as inevitable.
Jim Daws is president, International Association of Fire Fighters, Atlanta chapter.
