Public Employee Pensions

Lots of lies are circulating about public employees and how "rich" they are with their "generous" pensions. That's to create envy and class divisions since private sector workers have been screwed royally by corporations that ditched defined benefit pensions in favor of useless 401(k)s. Banksters are salivating at the prospect of stealing billions if not trillions of dollars in public pensions so they can screw up and retire in luxury.

This is an excellent column laying out those lies.

Note this about how much people would have to save to get a halfway decent retirement in a 401(k):

There is a well-financed effort to force 401(k) plans as the solution because Wall Street firms stand to earn billions of dollars in fees if pensions are converted to 401(k)s.

But the momentum of that effort is dwindling because 401(k)s have provided investors with a paltry return over time. Think about what has happened to your own 401(k) since 2008 and whether the money in that account would be enough to sustain you in retirement.

A 60-year-old who worked for 30 years has an average 401(k) account balance of $172,555, according to the Employee Benefits Research Institute. That will provide retirement income of only $575.18 per month. It would take a 401(k) account balance of $1,000,000 to provide $40,000 annually over one's lifetime. To achieve a $1,000,000 account balance, you would need to contribute $1,000 a month every month for 30 years and earn a 6 percent return [after fees]. With an estimated 20 million Americans unemployed or underemployed and with real wages stagnant for decades -- average hourly earnings for all private-sector production and nonsupervisory workers across the economy have risen just 5.3% to $19.72 since 2000, according to the Bureau of Labor Statistics -- those who work for a living in this country over the past 30 years, not many have $1,000 to save every month after paying their bills.

The real retirement crisis is not in the public sector. It is in the private sector. The average 401(k) balance today is just $71,500, according to Fidelity Investments. Americans whose retirement security relies on Social Security supplemented by such small balances in 401(k)s must consider how they will avoid falling into poverty in their retirement years and states will need to figure out how they will provide welfare to those who do.

As Schaitberger notes, 401(k)s were NEVER designed to be retirement plans in the first place but instead were supplementary to pensions and Social Security. Corporate America decided to abandon the social contract with workers. It's long since time to reverse this destructive course.