Thursday, May 25, 2006

Well, Social Security is doomed. But there are company pensions.

Right, right? Well, no.

Pension reform is high on the overloaded agenda of Congressional leaders. The need is obvious and immediate: Lots of companies have defaulted on their defined-benefit pension plans, and for many others, the clock is ticking on woefully underfunded liabilities that total a staggering $450 billion. The shortfalls--and there will be lots of them--will ultimately fall to the federal Pension Benefit Guarantee Corp., which is in no position to receive them. In fact, the PBGC currently has a roughly $23 billion deficit and counting.
Some commentators have lamented the demise of the corporate pension, but that’s like bemoaning the dearth of blacksmiths. I’d much rather have a defined contribution into a 401(k) than a pension that can be cut at any time if a company declares bankruptcy. As I’ve said many times before, the only person you can depend on for your retirement is you.

No comments: