Pension funds and retirement security are featured topics in both political parties' platforms, but the focuses are different.
Republicans are taking aim at the PBGC, while Democrats continue to promote workplace retirement accounts.
The platform approved Aug. 28 by the Republican National Committee at its convention in Tampa, Fla., included party concern over “increasingly underfunded” corporate defined benefit plans. To GOP officials, that raises alarms about a possible taxpayer bailout of the Pension Benefit Guaranty Corp. if the agency has to take over more plans. Such takeovers would add to its already record $26 billion deficit in fiscal year 2011, ended Sept. 30.
The platform calls for a presidential panel to investigate corporate DB plans that are insured by the PBGC, as a “first step toward possible corrective action.”
The wording took PBGC officials and pension fund organizations by surprise. Noting that PBGC premium increases were enacted as part of a highway funding bill signed July 6, “they might want to give them a little time to kick in before considering additional changes,” said Ted Godbout, spokesman for the ERISA Industry Committee, Washington, which represents employers on benefits issues.
PBGC officials declined to comment.
While details on the Democratic Party platform are being kept under wraps until Sept. 4, when they'll be presented to delegates at the Democratic National Convention in Charlotte, N.C., the DNC's website notes the goals of making it easier for people to participate in retirement accounts at work, and for increased pension portability.
More retirement savings incentives are supported by pension organizations like the American Benefits Council and the American Society of Pension Professionals & Actuaries, and the American Association of Retired Persons, which supports President Barack Obama's proposal for automatic workplace retirement accounts in his fiscal 2013 budget. The website for Republican nominee Mitt Romney notes tax cuts would help spur retirement savings.
Political observers say clues about the DNC platform can be found in the party's 2008 platform, which pledged to “automatically enroll every worker in a workplace pension plan that can be carried from job to job.” It also vowed to push companies to provide annual disclosures to employees about pension fund investments, and to make funding pensions a priority in the event of corporate bankruptcy filings. The platform also pledged to “make sure that CEOs can't dump workers' pensions with one hand while they line their own pockets with the other.”
On public pensions, the GOP platform calls for “immediate remedial action” to address unfunded pension liabilities caused by “the irresponsible promises of politicians at every level of government.” The DNC platform is not expected to address public pension plans.
Social Security is a lightning rod for both parties. The GOP platform calls for “comprehensive reform” that would raise the retirement age and slow the rate of benefit growth for higher-income earners, and allow younger workers to have personal investment accounts.
“Born in an old industrial era beyond the memory of most Americans, it is long overdue for major change, not just another legislative stopgap that postpones a day of reckoning,” the GOP platform reads.
The DNC, meanwhile, will continue the fight to preserve Social Security while seeking bipartisan ways to strengthen it, according to the committee's website.
“In recent years, Democrats have beaten back Republican plans to privatize Social Security — plans that would have exposed the retirement funds of millions of American seniors to great risk on the eve of the financial crisis,” the DNC website notes.
With that in mind, the official platform will have “pretty strong” wording about protecting Social Security, said DNC spokesman Patrick Rodenbush.
“We'd like to see straight talk — not just 30-second ads,” AARP spokeswoman Tiffany Lundquist said in an e-mail. “Our research shows that most (baby) boomers believe the candidates have done a poor job explaining their plans to strengthen Social Security.”
The GOP platform also pledges to seek legislation to establish an annual audit of the Federal Reserve as a way to bring more transparency and less potential for political influence. The platform also calls for a panel to study ways to set a fixed value for the dollar “as we face the task of cleaning up the wreckage of the current administration's policies.”
GOP officials noted that Ronald Reagan launched a similar study at the start of his administration to address double-digit inflation, but did not pursue changes. n
This article originally appeared in the September 3, 2012 print issue as, "Political platforms raise pension issues".