In one remarkable week in January, we saw the introduction of three proposals to expand retirement savings for the half of the workforce not covered by employer-sponsored plans: President Obama's myRA, Senator Tom Harkin's USA Retirement Funds Act, and Senator Bill Nelson and Senator Susan Collins' Retirement Security Act.
The merits of each proposal can be debated; indeed, the Pension Rights Center has written about all of them. Together, though, they signal a deeper recognition of the retirement income crisis and acknowledge that there is urgent need to address this huge and growing problem.
While the Center strongly supports new solutions for future retirees, we are also deeply committed to preserving the pension promises made to today's retirees. Too often today, pensions are blamed for creating budgetary woes in both the public and private sector, and shortfalls are being used as an excuse to cut hard-earned benefits. This is wrong.
That's why we found it particularly inspiring that several national and regional foundations - including Ford, Kresge, McGregor, Mott, Knight, Kellogg, and the Community Foundation for Southeast Michigan - have stepped in to contribute a total of $370 million to soften the blow to the City of Detroit's pensions and safeguard the Detroit Institute of Art's collection.
What do art and pensions have in common? For one, both represent fundamental American values. The Detroit Institute of Arts embodies the cultural heart of the city; the retirees, its human soul. Keeping pension promises to the people who loyally served Detroit is as critical to revitalizing the city as preserving the city's artistic treasures.
These foundations have set an example, and following their lead, Michigan Governor Rick Snyder has recommended that the state contribute money as well. The Pension Rights Center believes that financial institutions should also step up to the plate. After all, as we said in a letter to the Detroit Free Press, their actions helped to precipitate the economic crisis that contributed not only to Detroit's downfall and its pension underfunding, but also to the situation facing many other public and private pension plans across the country. It is only fair that they should help to make pensioners whole too.
Some say that these institutions will never contribute -- that it's wishful thinking on our part. But why shouldn't we ask banks and other financial institutions -- particularly those that were bailed out with TARP money -- to help keep pension promises to retirees?
Our concern for retirees goes beyond Detroit. If one city is able to cut its retirees' pension benefits -- and whether Michigan's Constitution allows Detroit to do so is being hotly contested - then what about other cities? What about state pensions? Or private pensions? Once these cuts start, where will they end?
Perhaps the term "pension promises" has been taken too lightly. We promise to send flowers... and then never do. We promise to make a date... and never do. Pension promises are different. They are legally binding commitments to pay hard-earned retirement income. They are something that we all have to protect.
This blog entry was cross-posted on the Pension Rights Center website.