Why Did Pensions Disappear?

Many corporations failed to fund their pensions, instead using the money to pad the pockets of corporate executives. Then, when the pension obligations eventually reached a breaking point due to years of improper funding, the corporation simply declared bankruptcy and paid 10 cents on the dollar on their pension obligations.

This fraudulent practice ended in 1974 when a federal law created the Pension Benefit Guaranty Corporation to provide pension insurance that the law required be funded 100% by corporations offering private pensions.

The response by the oligarchs? They dropped the private pension like the hot potato it suddenly was and the private pension was quickly replaced by self directed 401k plans. Boomers who were just entering the workforce during these years and there was no education to teach them how to invest - a burden the shift to 401k plans removed from the employer to the employee. The result? Millions of boomers with completely inadequate 401k balances as they enter retirement age.

Top it off with a tax on social security that did not exist until 1986 when Ronald Reagan signed it into law with a huge hidden provision. Social security benefits were not taxed unless your income in retirement - including 50% of your social security benefits - exceeded $25,000. Back in 1986 nobody's income in retirement exceeded $25,000.

But here's the kicker: that $25,000 figure was not - and is not - inflation adjusted. Thus, almost 40 years later, retirees must pay taxes if 1/2 of their social security benefits and all other income (such as IRA/401k withdrawals) exceed that same $25,000. And every year as social security benefits go up by the tiny 2.5% or less - just means a good chunk of the increase gets returned in taxes because so many people today exceed that $25,000 figure compared to how it was "sold" to everyone in 1986 (that nobody but the oligarchs would ever pay tax on their social security).

American capitalism at its finest.

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