The Ticking Time Bomb – The Need for A National Pension Commission

The Ticking Time Bomb – The Need for A National Pension Commission

January 13, 2012
Thomas J. Mackell, Jr.

We are all well aware that pensions in the private sector have been under attack for decades and the assailants have been very successful with doing away with Defined Benefit Plans. In the early 80s, some 80% of private sector workers were covered by Defined Benefit plans. Today, it is down to approximately 16% and sliding off the cliff.

Almost two-thirds of U.S. Corporate DB plans are closed to new entrants; 36% are active and open; 31% are closed; 30% are frozen and 3% have been terminated.

For years I have been predicting that the assailants would come after public sector Defined Benefit pensions and now we see that they are at it with a vengeance.

In a world that offers very little retirement income security we know that over 50% of Baby Boomers are ill-prepared financially to retire. Fifty-six percent of all Americans workers have less than $25, 000 saved for retirement. The picture gets worse with each passing day and the prospects for and likelihood that the elderly will wind-up poverty-stricken are very high.

Members of Congress are covered by premier health care programs and each is entitled to a generous pension plan. Don't expect any help from them to provide the mechanism for a secure retirement program for the rest of America, but, certainly don't touch theirs.

All investors wrestle with the multitude of risks both domestically and globally that have the potential of wreaking havoc with our assets and how we allocate them.

New York State Comptroller Thomas DiNapoli is the sole trustee of the $146 billion New York State Common Retirement Fund. In recent speeches he has sounded the alarm for the establishment of a National Pension Commission. We should heed his call.

I would invite any elected or private citizen to respond to this call. There have been too many obstacles put in the path of retirement income security and the prospects for a wholesome retirement for millions of Americans will not be glamorous.

Too many people are behind the eight ball and their weak financial status will place a tremendous burden on society. Yet, no one has the courage to connect the dots and look at the long-term consequences.

Trustees and other fiduciaries of pension funds wrestle with this issue daily, dealing with the unfunded liabilities that many funds have, the potential for investment returns to meet their actuarial assumptions in a highly volatile market environment worldwide and when all is said and done assessing what the outcome will be for the beneficiaries' long-term benefits.

The National Pension Commission is an idea that deserves serious attention and study. I committ to garnering the interest and support to make this happen. Please join me at this vital moment.

Thomas J. Mackell, Jr. Ed.D., Senior Partner, Black Thorn Lynch Associates, Inc., former Chairman of the Federal Reserve Bank of Richmond and author of: "When the Good Pensions Go Away: Why America Needs a New Deal for Pension and Health Care Reform."

January 13, 2012

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