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Private Pension Issues
- Archive 2010 -
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Pension Issues
Not your grandfather's retirement: 'boomers' to hit 65 (October 26, 2010)
The baby boom generation turns 65 on January 1, but it’s not yet time to retire. A study shows fewer than half of boomers expect to be retired between the ages of 65 and 69, whereas in the past three-fourths expected retirement within a few years of hitting 65. The demographic trend, however, means a shock to the economy, government finances, a strain for the health care system and even a potential shift in America's role as a global superpower.
Steering Clear of 5 Key Retirement Roadblocks (October 4, 2010)
The article offers thoughts on what could make or break one’s retirement, including suggestions for simple changes that could impact retirement in a big way. Keeping in mind how one pictures retirement and thinking about it realistically with regard to the assets one has puts into perspective what is attainable and how to plan carefully to make the hopes become a reality.
Report: The Not-So-Golden Years: Confronting Elderly Poverty and Improving Seniors’ Economic Security (September 27, 2010)
This 2010 report from the Center for American Progress focuses on the very real economic challenges that older Americans face today. Some of these include increased elder poverty, especially among women, unemployment spikes, and a shift away from defined benefit pensions in the US. These developments, along with many others, reveal the penury among old people that will unfortunately only continue to grow as 75 million baby boomers reach retirement with insufficient savings.
A Long Wait For Senior Housing
(September 20, 2010)
The waiting list for affordable senior housing has continued to grow
steadily in past years. According to the American Association of Homes and
Services for the Aging, the average wait for a unit is 13 months. This
article depicts the story of one such woman waiting for housing while
struggling without adequate funds—Social Security benefits and working
part time--to maintain her everyday needs.
Prepare for the
Old Age of Uncertainty (September 18, 2010)
The financial crisis of 2008 hit private pension funds hard, as
they lost 23 percent of their value ($5.4 trillion). The Organisation for
Economic Co-operation and Development warns that older workers are most at
risk because they probably do not have the time to make up for the losses
and recover the value of their pension funds.
Will Aging Chimps Get to Retire, or Face Medical Research? (September 1, 2010)
The Alamagordo Primate Facility, performing research on Apes since the 1950s, has begun to use middle-aged and elderly previously research chimpanzees for further invasive research. This action sparked a debate on the rights of chimpanzees, drawing attention from renowned primatologist Jane Goodall and others. Pending Congressional legislation targeting the rights of research Apes, the Great Ape Protection Act, would ensure the retirement of about 500 federally owned elderly laboratory chimpanzees to permanent sanctuary.
How Will Baby Boomers' Retirement Affect Stocks? (July 6, 2010)
By 2011, the first of 79 million baby boomers will hit 65 years, the retirement age. As they age, baby boomers may want to reduce their risk because they're uncertain about any investment in a time of financial instability. Also, baby boomers are likely shift their holdings to income-oriented investments as they get closer to retirement age. Yet, due to the stock market’s dismal returns in the past decade, few will have saved as much for retirement as they had wanted.
Congress Weighs A Pension Bailout (May 28, 2010)
US lawmakers are seeking a federal bailout of pension plans involving multi-employer pensions that companies and unions run jointly.. This action has put pressure on the nation's troubled retirement savings system. However, conservatives and anti-union groups reject the federal bailout proposal, fearing that it will necessitate a larger bailout scheme. Lawmakers and politicians in Congress are uncertain how they will resolve the pension crisis.
Factbox: States Take Steps to Rein
in Pensions (May 24, 2010)
A handful of States are cutting pension costs, regardless of legal constraints preventing them from removing the benefits they have already granted to current workers and retirees. Newly hired workers will see their benefits reduced and may face
lengthened vesting, raising retirement ages and length of service rules, as well as tougher formulas to calculate benefits. States may also curb the cost of retirement funds by delaying pension contributions and adjusting retirement age.
Report: The Trouble with Pensions: Toward an Alternative Public Policy to Support Retirement (2010)
Pension funds have taken a big hit since the financial crisis. Due to the widespread losses in US pension holdings, the Pension Benefit Guaranty Corporation (PBGC) may need a government bailout. Nersisyan and Wray’s article describe the mechanisms that lead to this disaster and the current scope of its impact. They outline the heavy risks that both individuals and society face with the current approach and suggest a new one that may be more secure.
Employers' 401(k) Matches Are Making a Comeback (April 11, 2010)
Through the example of the Minnesota Opera, the journalist underlines a recent and positive trend: According to a study, firms are restoring contributions to employee retirement plans after suspending them in the wake of the financial crisis. This shows growing confidence in the country's economic recovery. Typically, large companies are among the first to reinstate the match, with small businesses following. Experts expect the number of companies reviving the contribution to grow if the recovery gains momentum.
Pension Funds Fail to Reap Private Equity's Rewards (April 3, 2010)
According to a new analysis conducted for The New York Times, the nation's 10 largest public pension funds have paid private equity firms more than $17 billion in fees since 2000, as the funds flocked to these so-called alternative investments in hopes of reaping market-beating returns. However, studies show that private equity funds underperformed the Standard & Poor's 500-stock index by 3 percent annually from 1980 to 2003, after accounting for fees.
In Low-Interest-Rate Times, Treasure Your Pension (March 30, 2010)
The government has cut short-term rates to essentially zero and it has spent trillions to hold down long-term rates. This is good for the US economy as a
whole and especially good for borrowers. But these artificially low rates are terrible for savers, especially for retirees who want to convert their lifetime savings into lifetime income. Moreover, low interest rates have a secondary effect: they make pensions, whose benefits are typically fixed regardless of interest rates, enormously valuable and show how valuable lifetime pension benefits -- and by extension, Social Security benefits -- are.
Keating: Retirement Savings
Miscalculation (March 11, 2010)
In this article, Frank Keating, president and chief executive of the American Council of Life Insurers, emphasizes the difficulties many Americans will face during their retirement because they have not saved enough money. Since the burden of both saving and assuring lifetime retirement income shifted from employer to employee in the mid-1980s, the number of employees participating in a pension plan that guarantees lifetime benefits has
fallen drastically. Keating underlines the need to find ways to encourage US workers to step up their savings and learn how to manage those savings to assure financial security in old age.
Public Pension Funds Are Adding Risk to Raise Returns (March 8, 2010)
While companies are quietly and gradually moving their pension funds out of stocks and buying more long-term bonds to reduce their investment risk,
States and other bodies of government are seeking higher returns for their pension funds to pay all the benefits promised to present and future retirees. However, higher returns come with more risk. Moreover, a growing number of experts say that governments need to lower their assumptions about rates of
return to reflect today's market conditions.
401(k)s Still Fall Short as a
Retirement Strategy (March 4, 2010)
Only about half the US workforce is covered by some type of employer-sponsored retirement plan.
Most of those are 401(k) plans, which usually require employees to contribute and make investment decisions. Moreover, the majority of Americans can't depend exclusively on pension plans because of the substantial losses these accounts sustained during the Great Recession. Consequently, one-third of all workers will likely end up depending on Social Security for all of their retirement income.
Biden Unveils New Rules on US Retirement Savings (February 26, 2010)
Vice President Biden announced new regulations on US retirement savings aimed at protecting employees and their 401(k) and IRA retirement savings plans from financial advisers' potential conflicts of interest. The new rules also protect the rights of workers in collective bargaining agreements and access to the details of
healthcare plans.
Auto Enrollment Grabs Reluctant Retirement Savers (February 16, 2010)
More and more companies use auto enrollment, auto escalation and auto rebalancing, Thus, about 60 percent of companies with 401(k) plans automatically deduct a portion of a new worker's pay and put it in a retirement account. Moreover, among companies using automatic enrollment about half also use auto escalation, which gradually increases a worker's contribution each year. Finally, auto rebalancing is a way to reset the allocation of stocks, bonds and cash in a 401(k) fund every three, six or 12 months to keep it in line with
a desired mix of investments.
Report: Workers' Response to the Market Crash: Save More, Work More? (February 2010)
How well are workers making up for their retirement losses from the 2008 market crash. Experts says that they must be able to save more and work longer in order to improve their retirement prospects. In the summer of 2009, the Center for Retirement Research at Boston College (CRR) surveyed workers approaching retirement, age 45 to 59, on changes in retirement saving and expected retirement ages. The main results show an expected rise in retirement age and little change in retirement savings, with more education on different retirement plans as having the potential to change current trends.
Obama Makes Auto IRA, Retirement Savings a Focus (January 28, 2010)
The government is circulating proposals to help Americans save more for retirement. This article presents the major initiatives and some early reactions to them. The package includes programs to guarantee all workers access to a retirement plan through their jobs-with automatic IRA (Individual Retirement Account); expanding the tax credits that reward saving for retirement; and tightening 401(k) regulations to make them safer and more efficient.
How Retirees Saved the Banks (January 18, 2010)
In order to buy time for the banks to earn their way back to health, the government is keeping the savings yields low. Low yields allow banks to borrow cheaply, so money is rolling in and they don't need to compete with one another for savings depositors, which further depresses the interest offered. The situation is particularly tough on retirees who rely on interest income to supplement their Social Security. It leads some of them to take out reverse mortgages--as risky as they may be--to increase their income.
US Bank Faces Lawsuit for Pension Losses (January 12, 2010)
While the US economy may be starting to recover, individuals are now asking for answers and, sometimes, compensation from the banks. A class action has been filed against Sterling Savings Bank on behalf of staff seeking compensation over the firm's alleged failure to protect pension investments in company stock. The lawsuit alleges that 2,500 employees in five states lost money in their 401(k) plans as a result of the Spokane-based company's negligence in failing to disclose massive financial problems.
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