Pensions: An old-age problem

We're on the money. WE'RE IN THE MONEY. You know we've got I want it in 1935 President Roosevelt signed into law the Social Security Act. It was a day filled with promise. But over the years serious problems have developed for millions of older people who have relied only on their Social Security to support them in retirement and for many of today's workers tomorrow's retirement could mean a step into poverty. The president's commission on pension policy has presented a national policy report to the president and Congress will be exploring some of the recommendations in that report with Tom Woodruff executive director of the commission and his guests. Today's issue our retirement income system and the income adequacy. Mr. Woodruff we're concerned about the development of a two class system of retirement income in this country. One class can count on receiving pension benefits from their employer so security and maybe even savings. The other class of retirees has to rely primarily on Social Security benefits. While the

commission did not make a final recommendation it believes that serious consideration should be given to a universal minimum private pension system with a central portability clearinghouse. This interim recommendation was presented to the president and the Congress in its report. Portions of the business community aren't impressed with the concept of a minimum private pension system. They worry about who pay for it what Ronnie straw the Communications Workers of America and gave us his union's view. Well we have a short run position in the long run position in the short run. We support both face so security system. Private pension plans and savings. The three legged stool we support that concept in the long run. We believe the Social Security system should be the basis for providing retirement income for all citizens of the United States. We feel that any tax subsidies to private pension plans in general

benefit rich people and do not benefit poor people. This has been sort of the history of these type of plans and you know it's to the president's commission also recommended that vesting requirements be shortened commenting Karen Ferguson of the Pension Rights Center shortening vesting periods could be the most important recommendation that the commission comes out with. It's absolutely essential that in whatever program the president's commission ultimately recommends that credit be given Pension Credit be given for every year that someone works. Right now it is just a matter of luck accident chance call it what you will whether somebody gets a pension or not. They have to work 10 years. Who knows whether they're going to work 10 years for a particular company. It depends on the economy. It depends on whether they get a better job offer it depends on whether they don't like their supervisor or their supervisor doesn't like them. It's not. Consistent with the idea of a pension as being something that somebody earns that they only get it if they just happen to work 10 years.

We asked former Social Security commissioner Stanford Ross to comment on the work of the commission. Well I don't think there's any more important domestic issue than the future structure of the U.S. pension system I think that it's a overwhelming issue because you're talking about the way in which we transfer funds from the working population to the non-working population. We're already transferring amounts equal to 20 percent of our gross national product and every indication is is that this is going to increase dramatically in the years ahead so that coming up with good policies is as important a thing to do as we have on the domestic scene in terms of the way you're going about it. I'm glad to see that you're addressing a lot of the big issues all at once because I think the single most important thing that's required is a comprehensive view of the subject. We invite your comments and for a free copy of the commission's report.

Write to pensions post office box 9 3 6 2 Washington DC 2 0 0 0 0 5. This program was brought to you as a public service by the president's commission on pension policy. WE'RE IN THE MONEY we're IN THE MONEY. In 1935 Ted Lewis was singing We Are In The Money. And President Roosevelt signed into law the Social Security Act. It was a day

filled with promise. But over the years serious problems have developed for millions of older people who have relied only on their Social Security to support them in retirement. And for many of today's workers tomorrow's retirement could mean a step into poverty. The president's commission on pension policy has presented a national policy report to the president and Congress will be exploring some of the recommendations in that report with Tom Woodruff executive director of the commission and his guests. Today's issue spouses benefits many women especially non-working wives rely substantially on their husbands for financial support when they lose their husbands through death or divorce they often lose their economic security. The commission made several recommendations to remedy the situation. The newest and most widely discussed reform

proposal is earning sharing the philosophy that marriage is a partnership in which the contribution of each spouse is of equal importance and value has led to the idea of earning sharing. Under earning sharing each spouse would receive benefits based on their own Social Security record which would include half the sum of the couple's combined earnings during the marriage plus full credit for individual earnings when not married. We asked former Social Security commissioner Robert Ball to comment on earnings sharing personally that has great appeal to me. That seemed basically fair. I think the concept that both marriage partners contribute to the earnings that accrue to that partnership While it in effect is a reasonable presumption. But it's a very big change. It's a very big change in the way we have looked at marriage in many parts of this country it's a big change in the way the whole so Security system is set.

And even though I'm personally very sympathetic I think it's the kind of fundamental change that ought to be very widely discussed and really understood by a large part of the population before Congress made a move on it. Another of the commission's recommendations is that pensions should be treated as a property right in divorce proceedings and another recommendation deals with the survivor protection survivor protection should be automatic for married and divorced spouses to waive the benefit protection both spouses should be required to sign a waiver witnessed by the plan administrator or his agent after having been informed of the provision by the Administrator Karen Ferguson of the Pension Rights Center commented on the concept. One of the most tragic circumstances that now happens is the situation where a widow finds that she gets nothing from her husband's pension plan because he died too early. The usual situation is that he worked a lifetime for a particular company he earned a

right to a pension he told her that she was going to be taken care of. Then he dies and usually he dies a few days or a few months too early before a certain age in the pension plan and she gets left with nothing. The commission's recommendation addresses that. It states that if somebody had a right to a pension when he died that the widow would get something. The problem with the commission's recommendation is that it gives a choice to the pension plan of providing a lifetime retirement benefit to the widow or equivalent life insurance. Life insurance does not serve the same purpose as a lifetime pension income life insurance is meant to tide the widow over it's a lump sum for a couple of years until she adjusts to widowhood. We invite your comments and for a free copy of the commission's report. Write to pensions post office box 9 3 6 2. Washington DC 2 0 0 0 0 5. That address again. Pensions. Post office box 9 3 6 2 Washington

DC 2 0 0 0 0 5. This program was brought to you as a public service by the president's commission on pension policy. We're out of money. We're getting a lot of you know we in 1935 Ted Lewis was singing We Are In The Money. And President Roosevelt signed into law the

Social Security Act. It was a day filled with promise. But over the years serious problems have developed for millions of older people who have relied only on their Social Security to support them in retirement. And for many of today's workers tomorrow's retirement could mean a step into poverty. The president's commission on pension policy has presented a national policy report to the president and Congress will be exploring some of the recommendations in that report with Barbara Boyle Tory deputy director of the commission and her guests. Today's issue retirement age. The commission has recommended that the retirement age for Social Security not be raised. Now out of a recognition that there is a social contract with working people today who are approaching the retirement age. The question is however what we do in the 21st century. And one of the options is to have

instead of using an arbitrary age is to say why don't we guarantee to people that they could spend a specific proportion of their adult life in retirement if they worked for a certain proportion then they have earned their retirement for a certain proportion. The commission didn't come up with a specific formula but wants to see a retirement age that reflects our new life expectancy. At a recent commission hearing Lawrence Thompson of the Social Security Advisory Council testified on the council's recommendation to raise the age of retirement in the future. The majority felt that it was not unreasonable to move toward an increase in the age which full retirement benefits are provided. Given the changing demographic structure of the population in the next century the projected increases in life expectancy and the probable increased availability of jobs for the aged at that time as the growth in the total labor force is ceasing. The majority recognized that raising the retirement age

is in effect a benefit reduction and as such a change would have a major impact on people's planning for retirement. Therefore they felt action should be taken up with substantial lead time in order to give workers ample time to adjust their plans at the same hearing birds sidemen of the AFL CIO responded to the idea with high level unemployment which we have had for a long long time now. It's very hard for older people once they're no longer employed to get other jobs. It seems to me we're putting the cart before the horse. If we had a full employment economy if people's health were generally improved if you were people were working all their lives and physically demanding jobs and so on we would then begin to see more people who wanted to work longer perhaps not full time perhaps not full year but there would be a demand for their services. But to simply say as the council says

that beginning in the year such and such we're going to extend it by two months a year or whatever it is I think that's entirely arbitrary. Former Social Security commissioner Robert Ball Faber's work opportunities for the elderly and does not believe that the normal retirement age ought to be raised now. I would be a bit surprised but what 10 15 20 years from now we're in a labor shortage then employers will want the 66 year old 67 year old. And if we can just move up that age of retirement even one or two years you greatly affect the cost of pensions of Social Security and of health care for all of us. We invite your comments and for a free copy of the commission's report. Write to pensions post office box 9 3 6 2. Washington DC 2 0 0 0 0 0 5. That's pensions. Post office box 9 3 6 2 Washington DC

2 0 0 0 5. This program was brought to you as a public service by the president's commission on pension policy. Right now we're IN THE MONEY we're IN THE MONEY. You know we've got I don't want to get out in 1935. Ted Lewis was singing We Are In The Money. And President Roosevelt signed into law the Social Security Act. It was a day filled with promise.

But over the years serious problems have developed for millions of older people who have relied only on their Social Security to support them in retirement. And for many of today's workers tomorrow's retirement could mean a step into poverty. OK. The president's commission on pension policy has presented a national policy report to the president and Congress will be exploring some of the recommendations in that report with Tom Woodruff executive director of the commission and his guests. Today's issue work opportunities for older Americans. The commission believes that work opportunities for older workers should be encouraged and developed as a matter of national policy. The current pension system and labor market practices discourage work by older people.

Previously earnings from employment was an important source of income for older people. We want to examine new ways to encourage more work opportunities for older Americans. Therefore the commission has made several interim recommendations if Social Security benefits are included as taxable income. Then the commission believes that the earnings test on work by older Americans should be removed. Jim hacking is legislative counsel with the American Association of Retired Persons national Retired Teachers Association. He commented on a part of the recommendation that first of all I think I'd like to make it clear that we do not think that the question of whether or not some portion of Social Security benefits ought to be subjected to. Income taxation should be linked in any way with the question of whether or not it is desirable to eliminate the earnings test of Social Security. The taxation of benefits issue should be considered on its own and on its own merits in the context of many

broader questions and simply the earnings test. If I say the next US itself is concerned I think that there is now enough evidence to conclude that the perpetuation of the earnings test will cost society more in the aggregate than it would cost to Social Security programs to eliminate it. Gladys Springle has been director of an over 60 employment service for 20 years. We asked her to come and work opportunities for older Americans many older workers come in very disgruntled. You know the they had extended the age to work until 70. It's mostly as a myth because the business and industry reorganizes closes divisions abolishes jobs. And this is a way they call out the older worker. I feel very strongly that the older worker has a right to compete for work in America like anybody else. Doesn't make a difference about their age their color their religion or what

have you if they're qualified. They should have an equal chance. Some would have told us about another recommendation in the area of work opportunities. We want to encourage and develop information on alternative work patterns through research and demonstration programs in an existing federal agencies. We also want to encourage job retraining and job redesign for older workers in private industry through tax incentives federal employment and training programs and federal contract requirements. We invite your comments and for a free copy of the commission's report. Write to pensions post office box 9 3 6 2. Washington DC 2 0 0 0 0 0 5. That address again pensions post office box 9 3 6 2 Washington DC 2 0 0 0 0 5. This program was brought to you as a public service by the president's commission on

pension policy. WE'RE IN THE MONEY we're IN THE MONEY. You know we've got I don't want it in 1935 President Roosevelt signed into law the Social Security Act. It was a day filled with promise. But over the years serious problems have developed for millions of older people who have relied only on their Social Security to support them in retirement and for many of today's workers

tomorrow's retirement could mean a step into poverty. OK. All right. The president's commission on pension policy has presented a national policy report to the president and Congress. We will be exploring some of the recommendations in that report with Tom Woodruff executive director of the commission and his guests. Today's issue tax policy the various types of retirement income such as Social Security private pensions and personal savings are all taxed differently. The Commission feels that tax policy should be more uniform. The commission therefore has made a number of tentative recommendations. The tax treatment of employee and employer contributions and earnings on these contributions should be the same. The concept of a tax credit for low and moderate income people to encourage retirement savings and employer contributions to plans should be given serious

consideration. The tax treatment of saving specifically for retirement should be the same as a tax treatment of pension plans. The commissioners recommended that Social Security should be treated the same as other retirement programs and that the Social Security earnings test be removed for older workers. This would mean that eventually taxes on contributions to Social Security would be deferred and benefits from Social Security would be counted as income subject to taxation. Also in the future older people would not be penalized for continuing to work. We asked former Social Security commissioner Stanford Ross to comment. I think that it would be good if people could get Social Security and work I think particularly with the inflation with people living longer in retirement that people who can work

should not be deterred from working by the structure the laws the laws on a lot of work and let them get the benefits of their work. Similarly it seems to me you can use the tax system to recycle Social Security monies that are coming out better if somebody has a million dollars in addition to Social Security. That's one thing on the other hand if somebody has Social Security and nothing else but is going to earn just a little money and still be an exempt under the exemptions that's another thing the tax system can be used in conjunction with other changes to get a more equitable and efficient system. The commission also wants to encourage the private pension system through the use of tax incentives. At a recent commission hearing Williams Ziegler of the National employee benefits Institute commented from Armani's part one of the greatest incentives that you could provide to assist these companies and their employees and even the self-employed would be tax

deferral of employee contributions. If I have a retirement plan right here and I'm the employer and you're the employee. Right now I put that contribution. I don't give it to you I put it directly into the plan and it's tax deferred to the employee. At the same hearing J.B. McClintock of the American Council of life insurance and Social Security Committee testified on the subject. We believe that Social Security benefits should represent a balance between adequacy and equity and should provide relatively higher benefits for low wage earners and for high wage earners. With regard to taxation of Social Security benefits it would be our position that Social Security benefits should continue to remain completely free of income tax. We invite your comments and for a free copy of the commission's report. Write to pensions post office box 9 3 6 2. Washington D.C. 2 0 0 0 5. This program was brought to you as a public service by the president's commission on pension policy.