Too many of us take for granted that we will one day be able to retire, and retire with dignity! Unfortunately, a proper retirement is becoming a pipe dream for most of us. If you are among the select few in the private sector that receives the benefit from or currently participates in a defined benefit plan, consider yourself to be extremely fortunate. Corporate DB plans may soon be as rare as a NY Mets championship. Employees in the public sector still participate at a high rate (roughly 87%), but there is growing pressure on their plans to shift the liability from municipalities / counties / states, etc. to the individual participant through defined contribution plans. By whatever means you have, you should fight this trend!
At KCS, we have written a number of articles on the importance of DB plans to individuals, families and more broadly, our society. These articles are available on our website at http://www.kampconsultingsolutions.com. I would encourage you to review some of our thoughts on the subject, as your future retirement may just be on the line.
Asking an untrained individual to make retirement decisions for their own account is a formula for disaster! Yet, that is precisely what we are doing by transferring our employees into defined contribution plans. Asking an employee making less than $40,000 / year, who has a spouse and children, to divert a portion of their compensation to fund a retirement program is a JOKE!. Life gets in the way, and it is silly to think that individual can safely put away enough to generate even a modest retirement income. Allowing a participant to have access to their retirement assets prematurely is a structural failure!
It is shameful that most of us in the investment industry have done extremely well financially by picking at the DB carcass, while too many participants can’t retire. SHAMEFUL! It is time that we as an industry rally around the issue of retirement security, and begin to pose real solutions to this crisis that adequately places the risk on the shoulders of those that can handle the responsibility before we don’t have anyone retiring in this country. Just imagine the social, economic and political implications of that development!