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Do Congress and the president have the will to fix the broken pension system?

11:00 AM EST, December 31, 2012

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Blaming CEOs for the current pension crises may address Scott Klinger's need to engage in class warfare rhetoric, but it does not address the root causes for the funding deficit facing private pensions ("Fix the debt? Fix private pension's first," Dec. 26).

Retirees are living longer than anticipated while there are fewer active workers paying into private pension plans. The projected rate of return for most pension funds has fallen short because of a volatile stock market, a financial crises, a recession, low interest rates and a weak economy.

The result has been a dramatic growth in benefits and a decline in contributions and fund performance.

There is reason to blame CEOs for their personal financial excesses and for not being more honest regarding the under-funding problem of private plans. Similarly, union leadership views pension benefits as deferred compensation while ignoring actuarial soundness. Both contributed to the unsustainability of many private plans.

"Pension Deficit Disorder" is not limited to private plans. Under-funding exists in many state and municipal pension plans, with politicians and public-sector unions sharing equal blame for refusing to modify plans that are unsustainable.

As a retiree, I was surprised to learn that Mr. Klinger considers both Social Security and Medicare to be "earned-benefit" programs. That's a stretch considering their return of $3 for every $1 contributed.

Both programs require significant change, but the president and Congress are reluctant to consider unpopular measures that would make them sustainable.

Mr. Klinger complains that in 2020 the Social Security retirement age will rise to 67. What is happening in Europe is instructive.

Recently, Poland, which is enjoying robust growth, will phase in an increase in the retirement age for men from 65 to 67. By contrast, in Greece you can retire at age 58 with 80 percent of your benefits. What path does Mr. Klinger want to follow?

Lowell Abramson, Baltimore

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