76-19-B6
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Pensions[edit]
Transcript[edit]All of us should be more aware than we are of the Employee Retirement Income Security Act of 1974. This is particularly true if we're participants in a nongovernmental pension fund. One man has tagged that set of initials -- E.R.I.S.A. as standing for "everyman's ridiculous idea since Adam". The purpose underlying passage of the act was worthwhile and in the concept of government's responsibility to protect us from each other. Many workers have seen pension plans they were counting on in anticipation of their non-earning years wiped out in bankruptcies, company failures or just by faulty planning or management. When that happens, it is a tragedy of major proportions. Hence, the passage by Congress of the 1974 act to protect employees' pension rights. But, as in so many things government attempts to do with good intent, the solution to the problem has become the problem. Commissioner of Internal Revenue Jerome Kurtz recently told a House Subcommittee that as many as 30% -- almost one-third of the nation's half-million private pension plans -- may have gone out of business since ERISA was born in 1974. A subcommittee aide said the total is about five times the number previously believed to have closed up shop. Let me hasten to say that this does not mean that 30% of the nation's workers have lost their pensions. Most of the plans that failed were in small companies and about 5 percent of the workers have lost their retirement security. The reason for dropping the plans is the 1974 act. Small pension plans have been driven out of existence by the complex and cumbersome financial and reporting requirements. Small businesses are less able to handle the paperwork and meet the financial requirements and regulations than are large corporations with computerized. operations, large legal staffs and auditing departments. After hearing the testimony one congressman told Kurtz, "This is an alarming development. By passing the act, we may well have driven out 100,000 or 150,000 plans." An idea of the size problem they were trying to solve and the subsequent overkill is indicated by the Assistant Secretary of Labor for labor-management problems who said the Labor department disposed of 1370 pension fund investigations last year (remember, there were some 500,000 pension plans). They found only 642 violations -- all but four were settled out of court. It's ironic that Washington should be in the business of trying to regulate private pension plans in view of its mishandling of social security. Significantly, federal employees managed to exempt themselves from social security and set up for themselves instead a generous pension program which hangs over future taxpayers as an unfunded liability of billions of dollars. Recently, a columnist for the Boston Herald American, a specialist in economic affairs, revealed some startling facts about the Social Security Disability Program and the disability pensions for federal employees. This year, the government (meaning us) will shell out $32 billion for disability pensions, and that does not include our disabled military veterans. The federal government pays its disabled employees 75% of their full-time salary and it's tax free. In social security, disability pensioners have increased 45 times as fast as the increase in population and the cost has gone up almost 2000%. Congress should give ERISA a quiet burial and social security immediate first aid. This is Ronald Reagan. Thanks for listening. |
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