Be careful what you wish for, you might get it.
For many years - specifically since the Employee Retirement Income Security Act was passed in 1974 - those involved with pension funds have complained the nation's non-federal retirement system gets no respect from Washington.
Almost the only time the federal government paid any attention to pension funds was when it thought it could squeeze needed money out of them. No thought was given to the long-term health of the non-federal retirement system.
That might be about to change.
Pension issues suddenly have become hot topics with both political parties. But there's no guarantee the new attention will be better for the non-federal pension system than was the absence of careful consideration during the past 20 years.
Not that the early outlines of the Democratic Party's "omnibus pension bill" are at all objectionable. The proposal includes calls for:
*Easing penalties for minor violations of federal pension law;
*Allowing companies to make larger pension fund contributions when times are good;
*Eliminating non-discrimination testing under some circumstances for small businesses; and
*Giving small businesses a $1,000 tax credit for starting a pension plan.
The Republican Party is more vague in its platform proposals. It acknowledges the efforts made at pension simplification this year and says more must be done to increase both the amount and portability of retirement savings. It also supports expansion of individual retirement accounts and setting up spousal IRAs.
Unfortunately, while all of these proposals are worth considering, all apparently have been made without any consideration of the big picture. That is, no attempt has been made to define a possible national retirement income policy, into which the roles of the non-federal retirement system, Social Security and private savings have been fitted.
No effort has been made to answer key questions, such as: How much retirement income will Social Security be able to provide in the future? What do possible changes in Social Security imply for the non-federal system? How can the government best encourage the growth of pension provision through employer and employee efforts?
No effort to reform either Social Security or the non-federal system is likely to succeed until there has been consideration of a national retirement income policy. It's impossible to build a stable house without a well-drafted plan and a solid foundation.
There is a relatively short window of opportunity now for making changes in Social Security and the non-federal system. Pension issues have risen to the fore in the political debate because the baby-boom generation turns 50 this year, an age at which workers generally begin to contemplate retirement and worry about having enough resources for a comfortable retirement.
The window of opportunity for change will begin to close when the great mass of baby boomers pass from their 50s into their 60s - when they will benefit, not from being allowed more flexibility to prepare for retirement, but from actions to protect what they have managed to accumulate, and what has been promised them, either by the government or their employer. During the current period of attention, those involved with pensions should be alert to the possibility the process could go awry, and reform might move in directions they will not like.
