Against the backdrop of rising concerns over both public and private pension systems in the U.S., industry experts convened at a recent Wharton conference to debate ways in which retirement programs can be better managed. Participants discussed such topics as the problems facing Social Security, the solvency of the Pension Benefit Guaranty Corp., and the consequences of an increase in defined contribution plans like 401(k)s along with a corresponding decline in defined benefit plans. The conference was titled "The Evolution of Risk and Reward Sharing in Retirement."
Demographic changes, along with volatile capital markets and interest-rate swings, will require continued examination of pension systems across the board, said Olivia Mitchell, executive director of the Pension Research Council and director of the Boettner Center for Pensions and Retirement Research at Wharton. "This is a crucial moment in world history for retirement security. In the United States, the baby boomers are just three years away from receiving Social Security checks and an aging-population tsunami is sweeping the rest of the world as well."
After months of warning that the Social Security system is in danger of future collapse, President Bush has begun to lay out some details in his plan to reform the government-sponsored retirement system. The Bush proposal would cut Social Security benefits by 20% for retirees leaving the workforce in 2055. Those earning the maximum pay subject to Social Security taxes would face a 40% cut in benefits from what is promised under current law. Despite concerns raised by Democrats and some Republicans, Bush remains committed to converting at least part of Social Security into a private investment system.
At the same time, both Congress and the administration are discussing proposals to shore up the Pension Benefit Guaranty Corp.
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