photo credit: inspecie.co.uk
After the town hall meeting I attended on Wednesday I have been thinking about pension plans generally. The state of Utah is looking at changing their pension offerings for new employees to save the state from future financial ruin. I have seen other companies go through that process already. As a nation we have seen the cost of defined benefit pensions contribute mightily to the downfall of GM and Chrysler as well as having a hand in the struggles throughout the airline industry not so many years ago.
As I thought about all these examples I realized that even a fully funded defined benefit pension program is a gamble for any organization. Employees like the security, but it is an inherently risky proposition to offer such a plan.
I decided to look into the history of pensions and as with so many other systemic problems we face, the problem of widespread pension offerings really took root as a result of a poorly conceived government intervention, namely wage freezes during WWII where companies began exploring new ways to compensate workers besides simply using salary as compensation. Notice that this is also at the root of our dysfunctional employer-dependent health insurance boondoggle. The fact that both of these crippling trends were incubated by government wage interference and nursed along afterward through favored status in our tax policy should be a major red flag against further socialist economic moves by our government – no matter how good it might look now there is bound to be a crippling downside that will rear its ugly head later.