THE BROKEN PROMISE OF PENSION FUNDS

Ellen Kraft, Anne B. Fosbre and Nelcy M. Davila-Aponte

Global Journal of Business Research, 2007, vol. 1, issue 2, 55-63

Abstract: It’s 2007, do you know where our pension is? It was part of the American Dream, a pledge made by corporations to their workers for their decades of hard work, that they would be assured of retirement benefits such as pension and health care. Now more and more companies are rescinding their promise, leaving millions of Americans at risk. Unfortunately, many companies have already been struggling with underfunding their employees’ pension funds and as a result many employees are losing their pensions. The Pension Protection Act of 2006 was passed by Congress and signed by President Bush with a broad overhaul of rules. The Law gives private companies seven years to shore up funding of their traditional pensions. Special rules for seriously underfunded companies require them to pay higher premiums to eliminate their shortfall. A gradual disappearance of pensions is occurring in favor of saving accounts such as 401(k)s that require workers create their own retirement plans.

Date: 2007
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