Platform Item 31: Pension Plans
Henceforth no employer may offer an unfunded pension plan. All pension plans must be immediately funded with each payroll. Funds must be placed on deposit with an independent brokerage. They may not be administered by the employer or any union, trade association or by the government. Funds that are not vested must be subject to recapture and must remain in the pension plan. Independent pension administrators must be licensed brokerage firms registered with the Securities and Exchange Commission.
Argument
Is there anything more ugly than an unfunded pension plan administered by an employer, a union or a government? Our Congress is currently talking about another bailout to protect the pensions of teachers' unions. Why should these pensions require protection? Why are they not required by law to be funded from the first moment the employee or the employer makes a contribution? Why are these not funded independently by a brokerage in the same manner as is a 401K where visibility of funds deposited on behalf of an employee are reportable to the employee by that third party on a quarterly basis?
I think it obvious why these pension plans are unfunded. Unions, employers and government want the ability to be able to "borrow" (more appropriately steal) from those plans and enrich themselves on the backs of the American workers, both blue and white collar. Jimmy Hoffa went to jail because of irregularities with Teamster pensions. Lyndon Johnson took the Social Security trust fund and made it a part of the general fund to enable it to disguise a large growing deficit due to the Vietnam War. General Motors and Chrysler pensions were the subject of federal bailouts and now it is the teachers' pensions.
Several years ago a fireman retired from the Houston Fire Department and because of compensatory time and banked vacation the city owed the fireman more than $100,000. The city did not have this in their budget. The focus at the time of the Governmental Accounting Standards Board was to require municipalities to accrue the expense of such obligations and accrue liabilities on their financial statements. At the time Houston argued it would have been a burden on its taxpayers to tax them during the working life of an individual when the payout would not be until the person's retirement. Granted, this is not an example of a pension but the concept is the same. If a worker is having funds withheld from their paycheck or there are contracted obligations due to a pension plan based upon the earnings of that individual, those contributions should be an expense of the current year and funds should be placed on deposit with a licensed third party brokerage to invest that money at the discretion of the employee. Vesting typically applies after a specific period of employment and should the employee leave without being vested then the same recapture rules that normally exist for 401K programs could easily work for these pension plans. There need be no difference.
As for the current debate, should these teachers' unions have their pensions protected by the federal government? The answer is no. No taxpayer from an of the other 49 states should be obligated to insure the citizens of any state, territory or district as with regard to their pensions. The individual states involved need to be held accountable or the union itself for not funding those pensions on a current basis and setting aside funds for individual retirements. The federal government is not an insurance company and it needs to stop acting like one.
Investment Brokers???? Who do you think just brought down the world economy?
Most pension funds do use investment brokers....THAT'S how the pension funds turned to dust!!!
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To Curious: That failure was in the context of poorly or improperly regulated actions within the Brokers, including the packaging of toxic assets (poor govt policy and lending policy)
With proper oversight and rules, that should have been EASILY avoided, and can be now. The other choice is to go on as we are - which is unacceptable.
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Yours is truly an open-ended question, who do I think just brought down the economy? Pension plans were not turned to dust that are personally owned and held in trust by major investment firms. There is logically not one single person or industry that caused the economic crisis that we now are in but I will give a couple of reasons:
Freddie Mac and Fannie Mae - there was a concerted effort pushed by the Congress to ensure that ever family owned a home. This is noble goal if every family can afford a home but it was not practical because it required every bank to loan money to every man and every woman who wanted to buy a home regardless of their ability to service that loan. People were allowed to state income that would qualify them for loans they really were unable to repay. They were encouraged to borrow 125% of their home value with the assumption that home prices would continue to escalate and the loan would only be upside down for a brief period. The Bush Administration attempted several times to rein in Fannie Mae and Freddie Mac and asked that Congress regulate these two organizations because they understood the two mortgage monsters were buying portfolios that included many bad loans. But Barney Frank and Chris Dodd had sweetheart arrangements with these organizations. In the case of Senator Dodd it was a sweetheart deal through Countrywide on a lower than market interest loan for his own home in Connecticut. Barney had a boyfriend who was a senior executive in one of those two organizations. Both men backed these organizations as financially solid and blocked every effort to regulate them and to prevent them from buying bad loans. In the interest of equal housing opportunity banks were not only encouraged, they were required to make bad loans and then pass those loans onto these two government organizations.
A second reason that we are in this economic quagmire is the uncertainty that exists because of businesses not knowing what their costs will be next year. What will be their tax liability? What will be their liability for employee health care? What can they anticipate the costs of energy will be if the government follows through and imposes Cap and Trade laws on carbon emitting organizations? These are large unknowns. As a result, unemployment is 10% and will probably remain there until Congress can restore stability to its tax laws and business regulations.
Therefore, it comes down to whether you trust investment brokers more or less than the Congress. What is the record of the Congress? They have robbed the Social Security pension fund blind. It only contains IOU's today. Were this to be the case of the investment broker someone would go to jail. Sadly, we cannot put the robber barons of the Congress in jail for committing the same Ponzi scheme on millions of Americans that was perpetrated by Bernie Madoff on only a few investors. .
The Patriot
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