Pension Action E-Newsletter

August 25, 2008

Tips for Keeping Track of Your Pension
Worried about losing track of your pension?  A new PRC fact sheet helps readers avoid the pension paper chase when they retire.  Tips for Keeping Track of Your Pension provides details on what workers should do with important pension information at four critical junctures in their lives: while working for an employer that sponsors a retirement plan, when switching jobs before retirement age, upon retirement, and when a pension is terminated or frozen. 

Is Your Pension Plan in the Red Zone?
The Department of Labor has posted a list of multiemployer pension plans that are in “critical” or “endangered” status. If you work in construction, trucking, food service or other industries and are covered by a multiemployer pension plan, you may have received one of these “critical status” notices. This means that certain benefits you have earned could be cut back. Read our fact sheet to learn more about the “red zone” cutbacks that were enacted by Congress as part of the Pension Protection Act of 2006. Take a look at the list. Have you received a critical status notice, but can’t find your plan on the list? Is your plan on the list, but you haven’t received a notice? Let us know.

Article Sheds Light on Corporate Abuse of Pension Plans
A recent Wall Street Journal article focuses attention on a little-known practice that we call “pension laundering,” where companies use the tax breaks that pensions receive to fund lavish benefits for their executives.  These companies may endanger the retirement security of millions of American workers by paying for executive compensation out of pension assets.  Members of Congress are taking notice – Representative Peter Welch (VT-At Large) has written a letter to the heads of the I.R.S. and Treasury Department asking them to investigate whether this practice is legal.  In a blog entry called How the Rich Get Richer, PRC Policy Director Karen Friedman says this “outrageous” practice results in a system in which “taxpayers end up footing the bill for special benefits that are paid to top executives.”    

Treasury Says “No” to Pension Buyouts – for Now
A new Treasury Department ruling bars companies from selling the hard-earned pensions of rank-and-file workers to financial institutions. As we noted in a press release, the Treasury Department ruling ensures “that the retirement security of workers isn’t endangered by financial institutions that care only about making profits.”  But the Treasury Department also recommended that Congress act to permit the transfer of frozen pension assets to third parties in the future. Since this could result in pension funds being aggressively invested, placing retirees’ pensions at risk, we think this is an idea that we think should “be buried now.”  The National Retiree Legislative Network and the Association of BellTel Retirees have also issued statements strongly opposing any such legislation.

Did you know?
Did you know that half of all households with 401(k) and other defined contribution plans have less than $28,000 in their accounts? These shockingly low numbers come from the most recent Survey of Consumer Finances. Among households headed by people age 55 - 64, account balances are higher at an average of $61,000, but unless these households have a pension, their 401(k) savings may not provide them with adequate income in retirement. 

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