Press Release Reprint

Book on Pensions Warns of Retirement Crisis

Pensions in Crisis: Why the System is Failing America and How You Can Protect Your Future by Karen Ferguson and Kate Blackwell. Arcade Publishing, New York. $22.95. Available in bookstores or from Little Brown and Company (1-800-759-0190).

"All the pension money is down the tubes." With these words, Dot Harkness learned with horror that her employer had lost the company's entire profit sharing fund in a speculative investment. Kathleen Durkin was equally shocked when she received a notice that after ten years of work for a large corporation, she was entitled to a pension totaling 47 cents a month. Their stories are among many dramatic examples of the flaws in the nation's private pension system detailed in a new book, Pensions in Crisis. Written by Karen Ferguson and Kate Blackwell, the book sets the stage for a national debate on how to provide retirement security for all Americans.

"Everybody has a stake in fixing the private pension system," emphasizes Ferguson, Director of the Pension Rights Center. "People don't realize that while we're all supporting the current system to the tune of $30 billion in tax subsidies, the majority of private employees are retiring with no pension or a woefully inadequate one. Over half of all people working in the private sector have no retirement plan at all. The crisis is already here. Millions of Americans are finding that after a lifetime of work, they can't pay their bills."

The aim of Pensions in Crisis, according to Ferguson, is to directly involve working people in developing solutions to pension problems. The book also challenges today's disturbing trend toward do-it-yourself retirement, and exposes the risks presented by the investment of the $3.5 trillion in private pension funds.

Using real-life examples, Ferguson and Blackwell steer readers through the bewildering patchwork of pension problems with clear explanations of what they need to know in order to protect themselves. For example:

• Not everyone is covered by a company's plan.

  Margaret Hubbard worked 27 years for the same company only to find that she was the sole employee not included in the pension plan.

• Women lose out disproportionately.

  Esther Champion has worked all her life and at age 73 is still working because of pension formulas that penalize work patterns common to women.

• The value of a pension declines drastically over time.

  Howard Kaufman, age 90, has seen his benefit dwindle to "peanuts" since he retired because his plan, like vast majority of private retirement plans, does not include cost-of-living adjustments.

Although the book highlights the problems in the system, its underlying message is one of hope. Readers meet the courageous citizens whose stories helped persuade Congress to change unfair rules in the past and receive the facts they need to change in the future.

Reviews

"All Americans who are concerned about their economic security should read this important book. It tells how our current patchwork pension system is failing large numbers of people and lays out the most salient issues that citizens and policy makers need to address as we work to reform our nation's retirement policies." ---Senator Bill Bradley

"There are many disadvantages, even cruelties of old age, but being without money is one of the worst and the most common. The book tells of the risks and it tells how the alert individual and compassionate and attentive government can keep this misery to a decent minimum." ---John Kenneth Galbraith, Professors of Economics Emeritus, Harvard University

"This book has been needed for a long time. Pensions and pension rights are the most important misunderstood part of an American employee's working life. And it's all here, witty, sympathetic and easy to follow." ---Reuven Frank, former President of NBC News

"Pensions in Crisis not only provides a vigorous defense of private pension programs, but is a useful handbook for union activists and retirees seeking knowledge or information to protect their pension programs and benefits." ---William H. Bywater, International President, International Union of Electronic, Electrical, Salaried, Machine & Furniture Workers, AFL-CIO

"There's a light wonderful tone here, yet it takes on what may be the most serious issue in your life. A book to show how you, and I can avoid dying in an unmarked grave." ---Thomas H. Geoghegan, author of Which Side Are You On? Trying to be for Labor When It's Flat on Its Back.

Why Pensions Are Important to America

• More than $3 trillion in private pension funds represent the nation's largest single source of savings and investment capital. (p.143)

• All taxpayers pay for the private pension system. The tax breaks for private pensions will cost the Treasury $30 billion this year. (p.105)

Why Pensions Are Important to People

• Social Security provides only 40 percent of an average worker's earnings, approximately $8,376 a year. (p.225)

• One-third of older Americans have no savings. Half of those with income assets receive $1,719 a year. (p.247)

Who Gets Pensions Today

• Only one-third of private sector retirees receive monthly pensions. (p.6)

• Half of all private sector pensioners receive less than $4,482 a year. (p.50)

• Women's pensions typically amount to only 37 percent of men's. (p.51)

Who Will Get Pensions Tomorrow

• The percentage of full-time workers participating in pension and profit sharing plans has dropped 30 percent in the past decade. (p.12)

• Many of the 30 million workers in plans will be denied all or part of their benefits because of unfair rules, mismanagement of funds and cancellation of plans. (pp.25-1137)

• Do-it-yourself retirement is the only option for two-thirds of the private workforce, but most workers cannot afford to save for themselves. (pp.173-196)

Pensions In Crisis tells why women's pensions are so much smaller than men's:

Esther Champion of Baltimore, Maryland, who spent 50 years in the workforce, has a pension income of $1,750 a year. Not surprisingly, she is still working. A tall, poised woman of 74, Esther Champion tells a story that follows a pattern familiar to woman of all races. During the early years of her marriage, while her son was young, she worked stints in factories -- one that made parachutes, another that produced makeup compacts -- followed by clerical work at Reader'ss Digest, jobs that were not covered by pension plans. At age 40, she landed a job with Consumer Reports in the customer service department. She was ecstatic. Not only was the work interesting, but she also got pension coverage.

She worked full-time at Consumer Reports for 20 years. Then in 1980, when she was 60 years old, her department was dissolved and she lost her job. Next came the news that her pension amounted to only $96.17 a month. Her relatively low salary over the years and the fact that she was under 65 when she stopped working lowered her pension considerably. A formula that factored in her social security benefit took another bite. "We were assured pensions," she says wryly, but we didn't know how much we were going to get after 20 years of service...I'm lucky because I am healthy and can work. If I did not have work or became disabled, I would be in desperate straits. For too many women like myself, retirement is not an option."

Pensions In Crisis tells how ordinary citizens can help change the laws:

Geraldine Compton made the trip from her tiny mining community of Phelps, Kentucky, to tell Congress her story. It was a simple, but powerful tale. Her husband had worked for 27 years as a repairman for a coal mining company. He had always assured her that whatever happened to him the pension would be there for her. Then he died four hours before his fifty-fifth birthday. That was "too early," ruled the plan administrator. The widow wouldn't get a dime. "Nothing," she told a congressional committee, "has ever seemed so unfair to me in my whole life." Within the year, Congress changed the law to provide survivor's protection for widows and widowers regardless of the age at which their spouses died.

The power of people like Geraldine Compton and the other widows who testified on this issue cannot be underestimated. They toppled the plan-side Goliaths because they were able to focus attention in a dramatic way on a plight shared by tens of thousands. The executive director of a pension industry group once offered to drop his opposition to a piece of reform legislation if participant groups would promise never again to arrange for individuals to appear as witnesses at congressional hearings. The offer was not accepted, as he had known it would not be.

Pensions in Crisis: Why the System is Failing America and How You Can Protect Your Future by Karen Ferguson and Kate Blackwell. Arcade Publishing, New York. $22.95. Available in bookstores or from Little Brown and Company (1-800-759-0190).

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For more information, contact:

Karen Ferguson, Pension Rights Center
918 16th Street, NW Suite 704
Washington, DC 20006
(202) 296-3776