Thursday, February 24, 2005

Bad Editors

Where in this article Pension-reform idea a tough sell does it say anything about pensions? It doesn't say a damn thing about pensions, it is talking about reforming Social Security. An ignorant or politically biased editor wrote that headline and totally messed up its meaning. I read the headline, and then saw Rep. Portman's picture and believed I was going to read an article about how Portman was going to introduce new legislation about reforming Pension and 401(k) Plans. He has done that in the past and I actually like several elements of the law, especially the improvement to the vesting schedule requirements the legislation placed on corporations.

No, this is about Portman shilling for Bush's phase out plan for Social Security. SS is not a pension plan. Now, if were in England, the term "pension" has different meanings and here in America professionals like myself use the term pension plan to refer to traditional defined benefit plans, not 401(K) or profit sharing defined contribution plans. We most certainly do not consider Social Security to be a pension plan.

I fear the editor at fault here is most likely ignorant about the interworkings of Social Security and Pensions and how the terminologies differ. Where a bias claim can have an appearance is that use of the term "pension" is one of Bush's phase out Plan points. He is trying to make people think Social Security is just like their 401(k) Plans, when it is not. No matter what you may think about Bush's plan, you must understand that he wants to transform Social Security into something vastly different than it is today. SSA is closer to a defined benefit plan in its structure; it is more of an annuity plan, than a pension plan. Those plans put little risk on the participant/beneficiary. Bush wants a defined contribution plan, where the participant/beneficiary bears all of the risk. When he does not say this up front, he is being dishonest, something akin to a snake oil salesman.

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