RETIREMENT KIDNAPPED

Patricia KubistalAnd

Nancietta Stocking

Kappa Chapter

Lambda State

Chicago, Illinois

Carlene LutzSubstituting for Nancietta

OUR NEIGHBORS WERE ROBBED OF THEIR

RETIREMENT!

No one stole their identity

No one broke into their home

No one held them up

No Ponzi Scheme

NO POLICE REPORT

They had a plan◦ Worked Hard◦ Saved their money◦ Paid off their house◦ Invested in secure

bank CD’s

VICTIMS OF THE WAR ON SAVERS!

IN 2007 interest rates were above 4%

By 2012 interest rates were zero

Never have interest rates been this low for so long!

FEDERAL RESERVE

THEIR EARNINGS CAN NOT KEEP PACE WITH THE COST OF LIVING

WHICH IS ABOUT 4%THIS POLICY IS A DRIVE-BY

SHOOTING OF SENIORS

SOCIAL SECURITY CHECK The COLA was

withheld The COLA rate was

reduced The Medicare rates

increased Medicare rates

were based on income

Standard FAS 87 was intended to increase transparency, but instead employers reduced their liability

FINANCIAL ACCOUTING STARDARDS BOARD

An employee earns $1,000 but agrees not to be paid until the next year and the company records deferred compensation or a debt.

The next year the employer cuts the salary to $600. The employer saves $400 and reduces his debt by $400 which under the accounting rule is recorded as a gain.

HOW THIS WORKS

The company cannot take away money retirees have received

But it can slow the growth of the pension

Freeze the plan Lay off workers

AND THE BEAT GOES ON

Every dollar promised a retiree for◦ Pensions◦ Prescription drugs◦ Dental coverage◦ Life insurance◦ Death benefits

Is seen as a dollar that could potentially be added to a company’s income. The money owed 3 generations of employees becomes earnings enhancements!

THROUGH THE EYES OF THE ACCOUTNANT

ANOTHER VIEW

WAYS WE ADJUST PENSIONS

Employers says What They Mean

We are restructuring our pension plan. They move into “account style” or “cash balance” plans

Younger employees with limited tenure will benefit while older employees can lose as much as 20% to 50% based on new formula calculations

Balance sheets sometimes indicated that higher pension costs account for recent company losses

What they did not say was that the higher costs stemmed not from the regular pension plan but supplemental pension plans given only to top executives

HIGHER PENSION COSTS

Lump sum payouts are offered as though they are a special perk.

However, they may be worth significantly less than the value of the monthly pension check that they replace because of the way the formula is calculated

LUMP-SUM PENSION PAYOUTS

Underfunding is blamed on:◦ Stock market losses◦ Lower interest rates◦ Life spans increasing◦ Rising medical costs◦ COLA factors

While some of these statements bear truth, they do not state what often are the most significant reasons for the underfunding

PENSION IS UNDERFUNDED

Employers have siphoned billions of dollars out of the plans

Employers have failed to fully fund plans as required

Employers have used pension assets to fund buyouts

Employers have used pension assets to pay termination benefits when cutting the workforce.

TRUTH BE TOLD

Employers have used employee pension funds for golden parachutes for top executives

EXECUTIVE PARACHUTES

Have adopted the ways of industry

Some officials including educators have pensions of over $320,000 as their golden parachute

GOVERNMENTAL AGENCIES

School Districts and States that are required to make payments into funds are making reduced payments or no payments at all.

SCHOOL DISTRICTS/STATES

They claim that when they meet operating costs that there is no money to make payments

After years of non-payments, the payment is beyond their means

They publish the salaries of the highest paid pensioners who do not reflect the average pensioner

WHAT THEY DO SAY

Pension law does not allow retirees and employees to sue for punitive damages or compensation for pain and suffering when retiree’s benefits are illegally denied to them

LAW VS. PENSIONER

Retirees can sue only to reclaim the improperly eliminated benefits.

Pension lawsuits tend to be so lengthy and expensive

LAWSUITS

In 15 states, individuals may receive only 40% of their entitled social security benefits.

SOCIAL SECURITY BENEFITS The Windfall law

denies full social security benefits to those individuals who have earned benefits but receive a public pension

Companies are bought out; they merge and pension obligations follow.

The new company feels no loyalty to retirees who never worked for them

So they cut their benefits

Or they look for overpayments under their plan and demand repayment of prior overpayments

TRANSFER PENSION PLAN

Promised health insurance benefits from age 55 to 65 or supplemental for age 65 and above disappears or is greatly reduced

HEALTH INSURANCE

They bury “reservation of rights” clauses deep in the legalese of benefit plain documents.

Or state or municipal bodies enact legislation which takes away health benefits or greatly reduces them.

HOW CAN THEY DO THIS?

10 year freeze on COLA

Five year increase in retirement age

A two-tiered pension system

Increase employee contributions

Governmental agencies defer making their contributions and they never make the payment.

COMMONLY PROPOSED CHANGES

In Illinois we barely defeat Amendment #49 on the blue ballot. It changes our fundamental rights to a pension as we have it today. Be vigilant

DEFEAT AMENDMENT # 49

Funds are like pyramids in that the top—retirees—are supported by the contributing workers and employers.

NATURE OF PENSION FUNDS

32% of 18 – 29 year olds are either unemployed or working part-time while searching for full time employment

BEING PINCHED

An American male with only a high school diploma earns less than his counterpart of 35 years ago.

Student loan debt outweighs credit card debt!

FALLING BEHIND

A family headed by people 35 – 44 will be 70% poorer than their counterpart in 1984

The birth rate has declined by 185,000 in 2009 over 2007

RETIREES SUPPORTERS

GRIM FUTURE says Employee Benefit Research Institute

60% of workers have less that $25,00o in total savings and investments excluding home and defined benefits

30% have less than $1,000

The Unions after WWII began to negotiate benefits including pension plans

Governmental workers had pension plans

UNIONS AND BENEFITS

WHAT GROUP OF INDIVIDALS HAS THE LARGEST UNION?

TEACHERS!WITH MEMBERSHIP IN NEA AND AFT!

On teachers’ collective bargaining rights On teachers’ performances in the school From a once revered position to the scape

goat for the problems in education

TODAY WE ARE ATTACKED!

We become vigilant to all proposed changes to our pension plans

We contact our representatives and express our concerns

WHAT’s OUR PLAN?

Call, email, snail mail all family members, friends and neighbors to contact legislators about pension issues

Speak at gatherings

WORK TO DEFEAT PENSION CHANGES

NEED A PLAN

ONE PLAN THAT IS USED

DIFFERENT VIEW

IF ONLY WE KNEW…

Be conservative Look for best rates Credit Unions Select a trusted

financial advisor

PERSONAL FINANCES

FUTURE COSTS

CHANGES IN PLANNING

CONSIDER EMPLOYMENT

A CLOSING THOUGHT ON INVESTMENTS

DOUBLE YOUR INVESTMENT

If you had invested $1,000 in Nortel one year ago.

$1,000 in Enron $1,000 in

World.com $1,000 in Delta Air

Lines

Today Nortel would be worth $49.00

Today you would have $16.50

Today you would have less then $5.00

You would have $49.00

RETIREMENT PLANING

You had purchased $1,000 worth of beer one year ago

Drunk all the beer Turned in the cans

for recycling

BUT IF

Based on the above, the best current investment advice is to drink and recycle.

It is called the 401Keg plan

YOUR REFUND WOULD BE $214.00