Future May Find Many Without Pension;Economic Shifts Threaten to Make Retirement Plan a Thing of the Past
The prospect of a pension to supplement Social Security in old age is slipping out of reach for millions of Americans.</br></br>For a generation, the proportion of Americans working in jobs where they were earning credits toward a possible future pension had been rising. But during the last decade, this trend has reversed. It is now falling because some employers are not setting up retirement plans for their workers and other employers are curbing existing plans to save money. This imposes a sharp limit on how many future retirees will ever get a pension, according to pension experts.</br></br>The causes, they say, are many: Employers have less money to put into pension plans because of the economic slowdown and a decline in U.S. productivity growth; the labor force is increasingly concentrated in service businesses, which are less inclined and less financially able than large manufacturers to offer pension plans; expanding regulations and paperwork have made pension plans too complicated and expensive in the view of smaller employers; and a weaker trade union movement has been less able to obtain pension plans in collective bargaining.</br></br>The pension system has other problems as well. The benefits are low even for many who do qualify. Few plans include annual cost-of-living increases to offset inflation. Some people "cash out" pension rights before they retire and use the cash for something else, leaving themselves with no pension.</br></br>Finally, the government insurance system backing up private pension plans that collapse or fall short of their obligations is staring at potential liabilities beyond its capacity.