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Risky Business: Governors Advancing Privatization of Guaranteed Pensions

February 28, 2011

From today’s NY Times:

Lawmakers and governors in many states, faced with huge shortfalls in employee pension funds, are turning to a strategy that a lot of private companies adopted years ago: moving workers away from guaranteed pension plans and toward 401(k)-type retirement savings plans.

What that means is savings will be tied to the stock market, or bond market, or worse, the derivatives market. IF we see another downturn or collapse as we saw in 2008 where trillions were lost, pensioners would be hit with losses as these markets are not risk free and are heavily influenced by day traders and speculators. BUT, as I have written, this is what the Republicans and global capitalists want to do – they want everyone’s savings – including Social Security, to be linked to the banksters financial casino. The traders and BIG FIVE Too-big-to-fail banks will have access to billions to play with in derivatives and swaps. Is this what you want? I think not. By making this calculated move, Republicans are redirecting billions in investment monies to the very people who caused the collapse.

BTW: INSIDE JOB By Charles Ferguson received the Oscar for Best Documentary last night. I have seen it; posted the trailer here a few times; I encourage everyone to go see it, or buy it. It explains the mass fraud and corruption that took place which caused the global collapse — and is still going on.

The efforts come as the governors of Wisconsin and Ohio, citing dire budget problems, are engaged in bitter showdowns with public-employee unions over wages, pensions and collective bargaining rights.

The new plans allow states to set a firm, upfront limit on the amount they will contribute and leave it up to the employee and the financial markets to make the money grow. In a traditional pension system, the employer promises a certain benefit, then must find a way to pay for it.

Like private employers, which in droves have terminated traditional pension plans, many government officials like the idea of shifting much of a pension plan’s risk to the worker. And some workers prefer a 401(k)-type system because it gives them more control over their retirement assets, including the ability to take the money with them when they change jobs.

Utah lawmakers voted last year to make a partial changeover to a 401(k)-type plan, following in the footsteps of Alaska, Colorado, Georgia, Michigan, Ohio and several other states, which offer at least some version of it.

Entire article, click here

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