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Social Security
&Other
Public Pension Issues
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Archives 2009 -
Also see our sites on Private
Pension Issues, Trade Unions and Pension Issues
and World Pension Issues
Utah
Legislative Audit: Retired State Employees Who Return to Work Shouldn't Double-Dip (November 11, 2009)
While the Utah retirement system is facing a $6.5 billion shortfall, a recent legislative audit calls for state lawmakers to ban the practice of “double-dipping” in which employees collect a salary in addition to state retirement benefits. Utah is the only Western state that allows retirees to return to work with a salary, pension and 401(k) plan. Since 1995, some 4,311 public sector employees have retired and returned to government work. The lawmakers will now have to find a solution to this issue, taking into account that some retirees who returned to work may have done so because their pension was insufficient to support them.
Retirement? Good Luck With That; Financial Crisis Reveals US Retirement-System's Holes with Painful Clarity (September 21, 2009)
In this article, the journalist underlines many issues linked to the retirement-system in the US: the financial crisis has revealed many limits and problems. Indeed, savers lost 40% or more with the crisis, Social Security needs long-term support, defined-contribution plans have largely taken the place of traditional pensions and older Americans are being forced to work longer to make up the difference. However, if everyone agrees on the need to offer better financial education to savers, the solutions to solve the retirement-system’s problems are still much debated. We will see if Congress acts on President Obama’s proposals.
Is It Time to 'Super-Size' Social Security? (August 19, 2009)
Many analysts and other writers are suggesting ways to assure US retirees a better pension. This US News reporter suggests “super sizing” Social Security. He argues that the present system could be more flexible, giving workers the option to contribute a voluntary amount in addition to the required automatic withheld contribution. He suggests segregating the public and private contribution in separate earnings accounts where they could be allowed to grow modestly and safely until needed to pay retirement expenses. Most workers want to avoid any form of risk or surprise, preferring solid, long-term plans. Since the US Treasury borrows and pays interest on Social Security funds, the author would ban such practices.
Analysis: Health Care Debate: a Long-Running Story (August 12, 2009)
As it has been for many of the previous US Presidents, the reform of the Social Security system is one of the main projects of Obama’s government. The issue has not changed in years but the aim is to provide affordable health care to all Americans. Nearly 50 million Americans are uninsured and the cost of covering them would add up to an estimated $1 trillion-plus over the next decade. In the context of the current financial crisis, this reform is very risky and very challenging, but Obama has promised to do it without adding to the deficit. In 1965, Johnson signed the Medicare bill - a huge “moment of triumph." Perhaps 2009 too will witness such a moment.
Pay of Top Earners Erodes Social Security (July 21, 2009)
According to a Wall Street Journal analysis of Social Security Administration data, executives and other highly compensated employees now receive more than one-third of all pay in the US. The pay of employees who receive more than the Social Security wage base, now $106,800, increased by 78% over the past decade. The growing portion of pay that exceeds the maximum amount subject to payroll taxes has contributed to the weakening of the Social Security trust fund, which is predicted to be exhausted in 2037. However, Social Security Administration actuaries estimate removing the earnings ceiling could eliminate the trust fund’s deficit altogether for the next 75 years. GAA believes that all earnings should be taxed to support Social Security for all.
The Question isn’t whether Social Security Will be Around but How we’ll Pay for It (May 25, 2009)
Many Americans are concerned about retirement security as they hear Social Security projections that trust funds will be exhausted by 2037. Forecasts have become even more pessimistic as a result of the deep recession causing 401(k) plans to be ravaged. Social Security benefit checks provide 38.6% of total income of Americans 65 and over and are the sole source of retirement income for many older retired persons. At the moment, it appears that the SSA will have to dip into its trust funds sometime in 2016.
However, if the economy gets back on track, then Social Security reserves will be replenished.
Senior Citizens Now Receiving $13 Billion in Stimulus Money from Social Security; All Due in May (May 18, 2009)
The American Recovery and Reinvestment Act of 2009 provided for a one-time payment of $250 to adult Social Security beneficiaries and to SSI recipients. The payments have been arriving in mailboxes or direct deposited to the bank accounts of those living in the US. Seniors who have not received the payment by June 4 should contact the Social Security Office.
More States Start Pension Inquiries (May 6, 2009)
Wall Street, various fiduciaries, politicians and corporate managers are draining America’s savings by tampering with public pension funds. Attorneys in at least thirty states suspect that more than one hundred firms exchanged favors with politicians for contracts to invest in public pension money. Investing public funds on the basis of political considerations rather than merit heightens the risk of waste and loss. In response to this corrupt system, the Securities and Exchange Commission must strengthen controls at the federal level as it has jurisdiction over investment firms.
Social Security Benefits Not Expected to Rise in ’10 (May 2, 2009)
For the first time in more than three decades, Social Security recipients will not receive any increase in their benefits next year. The annual increase is referred to the cost-of-living adjustment (COLA) which is intended to preserve the purchasing power of Social Security by increasing benefits to keep pace with consumer prices. In turn, this has major implications for Medicare as millions of beneficiaries could see higher premiums for various types of coverage. Officials have already said the condition of Medicare’s hospital insurance trust fund is deteriorating because of the recession, which has reduced payroll tax revenues, the main source of money for the fund.
Recession Puts a Major Strain on Social Security Trust Fund (March 31, 2009)
With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office
(CBO). For decades the Treasury Department has borrowed money from the Social Security trust fund to finance government operations. However, it will have to start repaying the billions it has borrowed from the trust fund due to the retiree payouts from the current large surplus. In addition to declining revenues, the system may incur higher expenses due to big jumps in new retirement and disability claims.
They Don’t Want to Live With You, Either (March 24, 2009)
Seventy percent of elderly widows in the late 1800’s and early 1900’s lived with an adult child, but by the 1990’s the rate drastically dropped to almost 20%. Several economists who studied this phenomenon pinpointed the major year of change being the initiation of the Social Security Act around 1940. Once widows had an increased income, they could choose whether to live independently, because
it was economically possible. It’s important to acknowledge this milestone because for every $1,000 of annual benefits many more widows and divorcees can choose to live alone.
Report: A New Minimum Benefit for Low Lifetime Earners (March 20, 2009)
Social Security experts are proposing a new minimum benefit that targets workers with long careers and low earnings. This plan would provide workers with a modest credit to compensate them for caregiving, unemployment, or poor health. Thanks to this incentive, more adults may be able to retire with an improved financial foothold.
Retirement Security Focus on Senate Hearing (March 10, 2009)
On February 25, 2009, the US Senate Special Committee on Aging held a special hearing on retirement security, which for many older persons is very insecure. It featured testimony that offered insight into the ability of baby boomers to retire. One issue includes the plummeting value of 401(k) funds: one 2010 target date fund lost 41% in 2008. The hearing also emphasized the importance of safeguarding Medicare and Social Security and affirmed that there is no “entitlement crisis.”
Don’t ‘Fix’ Social Security; Expand It (March 1, 2009)
Today’s bear market may have finally put an end to the campaign to privatize Social Security. The campaign ran on the grounds that investors should hold on to their money and put it in the stock market. Those who did are now scrambling to save their retirement funds. David Langer, a professional actuary, suggests that it is for this reason that Social Security must play a bigger role in most people’s retirement. He proposes a standard by which the program would supply up to 70% of a worker’s average pre-retirement income, up from today’s maximum of about 57%.
Show Me the Money? It’s Easy: Social Security Isn’t in Trouble (February 28, 2009)
Social Security is the safest financial institution, as it will continue to send out full pension and insurance checks for another forty years. Despite this assurance, critics--mostly businessmen and conservative politicians--continue to propagate the fallacy that Social Security is an entitlement “crisis.” However, Social Security does not cost the budget anything aside from its administrative costs; in fact, changes applied to its financing in 1983 helped build the surplus in the trust fund that now exceeds $2 trillion. The surplus actually helps to pay for many government activities by loaning funds to the Treasury through investing in special-issue Treasury interest-paying notes.
Kohl: We Must Make Retirement Secure Again for Baby Boomers (February 25, 2009)
US Senate Special Committee on Aging Chairman Herb Kohn (D-WI) held a hearing on the economic downturn’s effect on retirement security, particularly for those who are close to retirement. Witnesses at the hearing provided testimonies on the factors that are affecting the ability of baby boomers upon retirement, including the weakened performance of 401(k) funds and the instability of housing values, among other issues. The panel focused particularly on 401(k) target date funds, designed to simplify long-term investing by automatically adjusting to more conservative investments as the fund approaches a set date.
There Is No Social Security Crisis (February 24, 2009)
Conservatives continue to assert that entitlements, particularly the nation’s pension system, are exacerbating the economic crisis. However, the Congressional Budget Office certifies that the Social Security trust fund is still growing with a surplus; in 2007, $179.3 billion was added to the fund, bringing its total to over $2 trillion. It is estimated that the trust fund will not be exhausted until about 2041, at which point tax revenues will still be able to cover a meaningful percentage of benefits. Only a few minor adjustments, if any at all, should be made to ensure Social Security’s solvency, and more attention should be invested in the ballooning cost of health care.
Democrats Resisting Obama on Social Security (February 22, 2009)
President Obama faces strong opposition from both parties as he attempts to address Social Security. Throughout Obama’s presidential campaign, most Republicans vehemently rejected his proposal to apply payroll taxes to incomes over $250,000. And now Democrats contend that Obama should invest more political capital on healthcare and the current economic crisis rather than on trying to raise more funds for Social Security. They argue that medical entitlement programs such as Medicare and Medicaid should be prioritized as they require big infusions from general revenues each year while Social Security still runs a surplus, and its reserves will not be exhausted until 2041. Sounds like the people earning $250,000 don’t want to pay the same tax rate for Social Security as their poorer fellow citizens.
The Real Grand Bargain (February 18, 2009)
President Obama is focused on revamping long-term debts, with a particular emphasis on changing Social Security during his “Fiscal Responsibility Summit.” Obama argues that the medical industrial complex has deepened our nation’s budget deficit, which includes the preposterous increase in the cost of drugs and overhead expenses. However, the author is concerned that the current economic crisis may pressure Obama to cave in to Conservatives’ proposal to cut entitlement benefits of older citizens.
Looting
Social Security (February 11, 2009)
Businessman
Peter Peterson is funding a campaign for Congress to put long-term budget
caps on Social Security and other entitlement spending to address the
nation’s financial crisis. Peterson has assembled numerous allies,
including a coalition of major think tanks, nonprofit organizations and the
media, in order to propel Congress and the Obama administration to approve
the “fiscal reform.” However, the government has a legal and
financial obligation to pay out the Social Security benefits at least for
another forty years.
Social Security is a publicly financed trust fund. Author William
Greider urges citizens to start a grassroots movement to respond to the
outlandish proposal.
A Proposal to Shore Up Banks With Pension Funds (February 9, 2009)
Gary L. Ackerman, U.S. Representative from New York, is sponsoring legislation that would allow public pension funds to pool some of their money and use it to create an entity that would buy $50 billion to $250 billion worth of preferred stock in America’s banks. Mr. Ackerman calls for the Treasury to guarantee the fund’s principal, plus an annual return of about 8.5%. He reasons that most of the funds suffered giant losses during the economic crisis, so a good solution would be to use those funds to bail out the banks. However, historic examples of such use of public funds have not yielded favorable returns for pensioners.
Report: A Vision for the US Pension System at 100 (January 29, 2009)
Author Henry A. Paulson rejects the popular contention that the US faces an “entitlement crisis” that must be fixed by scaling back or repealing Social Security all together. Paulson provides a detailed analysis on the development of the US pension system and argues that today’s rising life-expectancy and the rising cost of health care are increasing the need for pension benefits. He suggests that Social Security replacement rates be raised and that older workers delay retirement if possible
From Here to Retirement (January 26, 2009)
The 401(k) Retirement Plan has been specifically hit by the current economic downturn. Over the past few decades, the plan created wealth by replacing traditional corporate pensions. But the shift to 401(k)’s shifted risks from employers to employees, and under the current crisis this has led to employees losing their resources for retirement
Senate Panel Proposes $300 Bonus for Seniors (January 23, 2009)
Under the Senate version of President Barack Obama’s economic recovery plan, senior citizens receiving Social Security would get a bonus of $300. Veterans who get disability payments would also receive the $300 under the proposal. The bonus for seniors and poor people receiving Supplementary Security Income payments for the disabled is estimated to cost around $17 billion.
Obama Taps Spending Watchdog, Eyes Social Security (January 7, 2009)
The Congress Budget Office estimated an 8% US deficit of the entire national economy. In order to cut back costs and revive the economy, President-Elect Obama pledged to tackle out-of-control Social Security and Medicare spending.
Teachers May See Retirement Plan Changes (January 3, 2009)
Workers at nonprofit and educational organizations face fewer investment choices and tighter restrictions on how they can use the money in their retirement plans because of new IRS rules.
Report: Living Longer on Less: The New Economic (In) Security of Seniors (2009)
The Institute on Assets and Social Policy recently conducted a study to examine the long term economic security of seniors in America. The report finds that the decrease of retirement income (social security, pensions and savings) and the dramatic increase in expenses such as healthcare and housing, challenges the economic security of seniors. The report finds that 78 percent of all senior households are financially vulnerable. Future retires will be worse off, unless we attend to policies that grow and stabilize their resources for the future.
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