"as workers' retirement security slips away and CEOs retire in riches"

San Jose Mercury News, 9/03/2007

All workers, not just a few CEOs, need retirement funds

By Bill Lockyer

The American worker powers our economic growth, but for years that
worker's retirement security has been steadily, disturbingly
disappearing. As we celebrate labor's contributions today, we should
truly honor workers by ending that erosion and reinvigorating the
pension system to ensure it provides the means for them, and their
children and grandchildren, to enjoy retirement.

In today's America, only one of every five private workers has a
secure pension. Increasingly, businesses have frozen or
abandoned "defined benefit" plans that guarantee a certain level of
retirement benefits to workers. Employers have moved instead toward
plans that set specific and limited levels of contributions by
employees and, in some cases, by employers. For workers,
these "defined contribution" plans increase risk and diminish
retirement security. The average 401(k) savings for workers age 55 to
64 is a mere $60,000, enough for a monthly retirement annuity of just
$400.

The federal Pension Benefit Guarantee Corp. reports that the number
of secure, private-sector defined-benefit retirement plans in the
United States plunged by 25 percent from 1999 to 2004. A survey of
162 private pension providers, conducted by the Employee Benefit
Research Institute, found that 35 percent either closed or froze
their pensions in the past two years. An additional 33 percent said
they would do the same within the next two years.

This trend's effects are starting to hurt. The National Retirement
Risk Index, released in June 2006 by the Center for Retirement
Research at Boston College, showed that more than 40 percent of
Americans are at risk of not being able to maintain their standard of
living in retirement. That represents a 39 percent increase in
retirement security risk since 1983.

Meanwhile, as they have slashed workers' pensions, corporate chief
executives have been fattening their own.

IBM froze its pension plan for workers in January 2006. But CEO
Samuel Palmisano will receive an annual pension of $4 million -
$75,000 a week - when he retires at age 65. Meanwhile, over at AT&T,
former CEO David Dorman received a $2.1 million annual pension, or 60
percent of his salary, after only five years with the company. In
stark contrast, AT&T accountant Ray Colotti received an annual
pension of only $28,000, or 33 percent of his salary, after 33 years
on the job.

Unfortunately, as workers' retirement security slips away and CEOs
retire in riches, some "reformers" want to inflict further harm on
workers. One new proposal would chop the retirement benefits of the
next generation of California police officers, firefighters,
teachers, nurses and other public employees. Under the plan, future
employees would see their pension benefits slashed by 60 percent
compared with current workers.

Proponents of this mislabeled "reform" describe public-worker
pensions as "bloated." The facts prove otherwise. The largest segment
of California public-sector pensioners - those who retire at age 60
after 19.9 years of service - receive an average monthly check of
just $1,881. That's a bit less than $22,600 a year.

Nearly half of all retired state and local government workers covered
by the California Public Employees Retirement System receive annual
pensions that fall $1,600 below the federal poverty line for a family
of two. These are modest retirement packages that provide a modicum
of retirement security for workers and their families after years of
service to taxpayers and communities across the state.

The California "reform" proposal also would extend by years the time
public-sector workers would have to stay on the job to receive
stingier pensions. This provision would jeopardize public safety by
forcing graying cops and aging firefighters to work long past the
time when prudence dictates they retire.

The notion that public-employee pensions somehow pose a grave threat
to taxpayers doesn't survive scrutiny. The largest state pension
system, CalPERS, has the resources to pay pensions at the current
rate for another 27 years, even if it doesn't receive another penny
in revenue. As a percentage of payroll, taxpayers contribute
virtually the same amount today to fund CalPERS members' retirement
benefits as they did 20 years ago - 15 percent in 2006-07, compared
with 14 percent in 1987-88. Good investment returns pay for the
majority of public pensions, not tax dollars.

We need to strengthen retirement security for all American workers,
not further weaken it for some. We need to roll up our sleeves,
redesign and rebuild the promise of a decent retirement at the end of
our working lives, and protect that promise for future generations.

In the meantime, we should not be taking a hatchet to anyone's
pension.

BILL LOCKYER is California state treasurer and a member of the
CalPERS Board of Administration and CalSTRS Teachers' Retirement
Board. He wrote this article for the Mercury News.

http://www.mercurynews.com/opinion/ci_6790509