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Central Pension Fund The Rich Can Gamble on Retirement--Workers Want a Sure Thing The AFL-CIO recently released a study that received nationwide attention. The study showed that the ratio of executive pay to factory worker pay, which was 42 to 1 in 1980, had exploded to 419 to 1 in 1998. The study confirms that what had been a large separation between the rich and the working class has virtually become a cavernous divide. Of equal alarm for retirement security, however, was a less noted study recently released by economist Edward Wolff of New York University. Mr. Wolff found that, in spite of the widespread trend away from traditional defined benefit pension plans and toward the more risky 401(k) plans in which workers must become investors of their own retirement funds, nearly 90% of all shares of stock in the United States were held by the wealthiest 10% of households. Mr. Wolff’s figures were drawn from 1997 data--the most recent available. Accordingly, although Wall Street has for the last 10 years marketed 401(k) plans as the opportunity for workers to become active participants in the stock market, the fact is that the stock market continues to be the almost exclusive domain of the rich. There have also been many recent press accounts highlighting the dangers of individual stock trading by over eager and ill-informed investors. These accounts have documented the devastating losses incurred by many small investors known as “day traders.” These investors view themselves as the masters of their financial destinies who merely need to make a few big hits in the market to secure their retirement security. And while 401(k) accounts permit participants to avoid the folly of day trading by selecting mutual fund investments, a cursory review of the financial pages of the morning newspaper shows that mutual funds are also subject to wild swings in value. These recent studies and press accounts reinforce the value to members of the International Union of Operating Engineers of the Central Pension Fund and the 37 other defined benefit pension plans maintained by IUOE Local Unions throughout the United States and Canada. These plans provide predictable monthly pension benefits for life, disability protection, spouse protection and early retirement opportunities--with all U.S. plans insured by the federal Pension Benefit Guaranty Corporation. Most importantly, IUOE plans provide professional investment management which relieves their participants of the obligation, risk and worry of exposing their retirement security to their own stock selections--or gambles--in the stock market. The rich can afford to gamble, workers want a sure thing. Originally
published in the International Operating Engineer |