It’s time to face retirement realities, PBGC Director Josh Gotbaum writes in the March 11 issue of Long Island’s Newsday.
People will need to save more for longer retirements, but that’s not enough. Gotbaum calls for new pension options that share responsibility between employers and employees.
Read Don't ignore retirement insecurity.
Today marked a big victory for American Airlines’ workers and retirees. American has reversed course and decided to keep the pension plans of its non-pilot employees. The pension plans will be frozen, which means that workers won’t earn additional benefits going forward. But they’ll get every dime of the benefits they’ve already earned. When companies terminate plans, many people see pension cuts because of legal limits on the amount PBGC is allowed to pay. Here’s what PBGC Director Josh Gotbaum had to say: “It is great progress and good news that American recognizes it can reorganize successfully and preserve its employees’ pension plans. We’re also glad the company is willing to work with us to preserve their pilot plan too.”
Great news: Americans are living longer. Unfortunately pensions haven’t kept up, and people are rightly worried about retirement. PBGC Director Josh Gotbaum today told a National Institute on Retirement Security conference in Washington, D.C., that new types of defined benefit pensions can help solve the problem of retirement insecurity. Plan designs that marry the best features of DBs and 401(k)s offer lifelong income without forcing retirees to be investment experts. Flexibility is key, Gotbaum said. “One size doesn’t fit all. We in government can do everything in our power to facilitate new plans and eliminate regulatory requirements that burden employers without helping workers and retirees.”