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PBGC Blog: Retirement Matters

Hispanic Heritage Month

Each year, on September 15, we celebrate the start of National Hispanic Heritage Month. During this celebration, which runs through October 15, we recognize the significant impact Hispanic and Latino Americans have had on American history. We celebrate their rich culture and countless achievements. And this year's theme, "Hispanics: A legacy of history, a present of action and a future of success," reminds us of their profound impact on American culture. 

In his proclamation, President Obama said our Nation is strengthened when we lift up the Hispanic community. He also said when we create more ladders of opportunity, we provide hope for all Americans to reach their greatest potential.

But when looking at retirement preparedness, Hispanic Americans are often lower on the ladder than the general population.

Although many Americans face difficulty planning for retirement, Hispanic Americans face unique challenges that other minority groups do not. Hispanic Americans typically have less access to employer-provided benefits and contribute less on their own. The reason? Greater emphasis is usually placed on short-term financial security, such as eliminating debt. Saving for retirement is simply not a short-term priority.

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PBGC Multiemployer Plan System is in Increasing Touble.

The news isn't good for 1.5 million people across the country in a swath of multiemployer plans. According to PBGC's Projections Report, released last week, these plans are likely to fail putting the retirement benefits of current and future employees in jeopardy. Not only that, but if those plans fail it may bring down the entire system and with it the retirement security of the 10 million people within it.

Right now, there are more than 10 million people and their families covered by about 1,400 multiemployer plans in industries like construction, mining, supermarkets, transportation, and hospitality. Massive losses during the economic slowdown in 2008-2009, left many plans seriously underfunded. The economy has improved significantly, but for the plans most in trouble, the improved economy was not enough. These plans responded by increasing contributions and reducing future benefits but it still wasn't enough.

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Despite substantial economic and market gains, multiemployer pension plans covering about 1.5 million people are severely underfunded, threatening benefit cuts for current and future retirees, according to the FY 2013 Projections Report released today by the Pension Benefit Guaranty Corporation. By comparison, the financial situation for private single-employer plans, which cover about 30 million participants, is projected to improve.

Image showing multiemployer plans coverage

As required by the Employee Retirement Income Security Act, PBGC annually provides an actuarial evaluation of its future expected operations and financial status. The FY 2013 Projections Report (formerly called the "Exposure Report") released today provides a range of estimates of the future status of private pension plans and their effect on PBGC's financial condition, drawn from hundreds of economic scenarios.

A new AARP survey shows that health care, education, financial security and the digital divide are among the most important social issues for African-Americans ages 50 and older.

The national survey, which included phone interviews with 650 respondents, demonstrates that while many older African-Americans are optimistic that the country is moving in the right direction when it comes to issues such as health care, education and the digital divide, they are significantly less optimistic about finances, employment and workforce discrimination. Lower levels of optimism related to finances and employment could directly impact their future retirement security.

Having a financially secure retirement was considered the second most important issue (cited by 16% of those with multiple answers), while access to high quality education was the third most important issue (cited by 14% of those with multiple answers).

Complete survey results can be viewed on the AARP website.

Joshua Gotbaum sitting with Adam Shapiro

In part two of the Fox Business two-part series "Nationwide Retirement Crisis," PBGC Director Josh Gotbaum says millions of Americans have no retirement savings, calling the issue a national crisis.

In his interview, Gotbaum addressed issues concerning the existing retirement system, including:

  1. The existing retirement system is not covering most people,
  2. It doesn't lead to enough saving,
  3. And it doesn't lead to lifetime income.

People are living longer, healthier lives, which means retirement will cost more.

Watch the complete video interview on the Fox Business website.

Joshua Gotbaum sitting with Adam Shapiro

In part one of a two-part series, "Insuring Private Pensions," Fox Business reporter Adam Shapiro and Pension Benefit Guaranty Corporation Director Josh Gotbaum, discuss the need for Congress to raise premiums to ensure 42 million Americans receive the pensions they were promised.

By now, you may have read news headlines addressing a study on PBGC premium increases released by the Pension Coalition. In an official PBGC statement, Gotbaum responded saying, "Unlike the FDIC and other Federal insurance programs, Congress has continued to set PBGC premiums and has done so in ways that both underfunds PBGC and is convincing some companies they shouldn't offer pensions at all."

In his interview, Gotbaum explains the specific PBGC-related issues that affect the retirement crisis.

Watch the complete video interview on the Fox Business website.