Senate considers pension overhaul
TEXT OF INTERVIEW
SCOTT JAGOW: A lot of Americans have pensions to fund their retirements, but the companies they work for haven't always been showing these workers the money. This week, the Senate's expected to vote on the first pension overhaul in three decades. The House passed something last week. Karen Friedman is with the Pension Rights Center in Washington. She doesn't like the House bill very much.
FRIEDMAN: The idea of the bill was to get companies to improve funding in pension plans, and yes the provisions will do that, but a lot of businesses have been telling us that the provisions are so onerous that instead of improving funding in pension plans, what it's going to do is drive a lot of companies out of the system because they're going to say 'this is too burdensome' and 'why do we need these plans.' So instead of improving the pension system, what it may be doing is expediting the demise of the system.
JAGOW: What is the reason that your organizations believes the pension system is a good system anyway, because there are people who argue that pensions are antiquated and should be shifted over to 401ks anyway.
FRIEDMAN: Well the pension system in this country has been the best way of providing adequate retirement income to millions of Americans and there's been an increasing shift to 401k plans. And statistics are already showing that while 401k plans are good supplemental savings plans, they are not providing adequate income to the majority of Americans. If you look at the statistics right now, the median account balance in 401k plans is only about $15,000. And we're basically saying to the American public, 'everything's on your shoulders, you know, you have to save for your own education and your children's education' which you know those costs are going out of the roof. We're telling people, 'you have to save for your own healthcare.' Those costs are also, you know, soaring. And then we're telling people also, 'oh and save for retirement.' There's a need for new solutions. There's a need for new kinds of plans that take the best of the old style pension plans and maybe merge them with 401k plans. You could sort of have new kinds of hybrid plans, but they have to be fair to workers.
JAGOW: There are companies who are supporting this, like GM. Why would they support something like that?
FRIEDMAN: You know there have been some changes to the bill that companies would support because the bill used to be much more onerous in some respects. But still I think that there's a lot of companies that have told us they're worried that the bill could drive companies out.
JAGOW: Karen, thanks so much.
FRIEDMAN: OK great, talk to you soon.
JAGOW: Karen Friedman is Policy Director for the Pension Rights Center in Washington.