Who Owns My Pension?

For most Americans, their principal assets at retirement are their Social Security, their Medicare entitlement, and, if middle class, a house and often some kind of private pension. If they are upper middle class, or have been unusually prudent, they also have significant savings or investments. In my case, I own my house, and have a modest amount in savings and investments, but my only hope for a comfortable middle class retirement is my pension (including SS), which, if I work a few more years, should replace a bit more than half my current income.

For that reason, I get pretty nervous when I see the headlines about company after company using bankruptcy to shed unwanted pension fund liabilities. In some cases, corporate raiders take over companies, sell the valuable assets, pocket the profits, and hand the bills to the pensioners. The same demographic and competitive factors that threaten private pensions also menace state, local, federal, and military pensions. When the courts terminate pensions rights of employees they are collaborating in a theft - the theft of deferred wages earned by those employees. The government has been a collaborator in this theft, by failing to regulate the management of the promised pensions. Most egregiously, the Federal government has recklessly mismanaged its own pension obligations, both by collecting far more SS tax than is needed to fund current obligations and by recklessly spending that money for other purposes.

One way to deal with some of the problems of the current system would be to require management of all pension funds by responsible fiduciary agents. For example, in the case of the Social Security Trust, funds should go to an independent agent responsible for managing the funds, and independently reporting on assets and liabilities. Currently, such funds are invested in non marketable treasuries which demagogues can refer to as meaningless pieces of paper. If the Fiduciary invested in a mix of bonds, marketable treasuries, and stocks, Congress and the President would be forced to accept that debt as as real as all the others the country has contracted. Furthermore, it should be made clear that the ownership of the trust rests with the beneficiaries, not with whatever political party (or Corporate raider) is currently running the show. This is only one small step, but it might force Corporations and the government to deal more honestly with their pensioners.