 Unnecessarily long |
| Review Date: April 17, 2010 |
| Reviewer: Aminul Haque, Calgary, Alberta, Canada |
| The essential components of the whole book could be fit into one op-ed piece. Relevant topic, but was it necessary to discuss in any detail what the important characters ate before, during or after each meeting? I guess the effect of these unnecesary details was that the end chapter was very short and sketchy at best where the writer is supposed to discuss solutions. One major exclusion was that of a discussion of the European model, where employee friendly companies still make profit and stay competitive to build world-class businesses. |
Data Challenged
|
| Review Date: March 25, 2010 |
| Reviewer: Donald L. Carder, |
If you are looking for an analysis of the resources and plans available to Americans for retirement, past and present, and what can be done to ensure that current and future elder Americans can live with grace and dignity, this is not the book for you. If you would like to put a face on some real characters and what motivated them to create three pension system disasters, then this is an interesting read. Mr. Lowenstein begins his concluding chapter with: "America is sitting on a retirement time bomb." That may be true, but nowhere in his book does he provide the kind of data necessary to support such a statement, nor does he provide any of the kinds of social science data or analysis needed to indicate how one would go about designing a system that works fiscally and humanely.
On the other hand, social policy is meant to guide real people, with real strengths and weaknesses (in the cases described in this book, mostly weaknesses). It is always helpful to understand the potential blinds public people can get us into by being short-sided or opportunistic. Anecdotally, this book provides that. So, on the positive side, after reading this book one would think twice about leaving the design and management of any pension system to corporate managers, union leaders, or state, local, and federal politicians unless there were strong regulations in place, enforceable by independent agencies. |
Book Review from the Aleph Blog
|
| Review Date: January 23, 2010 |
| Reviewer: David Merkel, Ellicott City, MD United States |
Where were you while America aged? ;) I've been following the issues in this book written by Roger Lowenstein for over 20 years. As an actuary (but not a pension actuary) and a financial analyst, I have written about the issues involved since 1992.
Roger Lowenstein motivates the issues surrounding pensions by telling three stories, those of General Motors, the New York City Subway, and the City of San Diego. He captures the essence of why we have pension problems in a way that anyone can appreciate. I sum it up this way: promises today, payments far in the future. Get through the present difficulty, at the price of mortgaging the future.
If you repeat that recipe often enough, you get into a tough spot, as GM is in today. Give GM credit though, a lesser firm would have declared bankruptcy long before now, and shed its pension liabilities to the Pension Benefit Guaranty Corporation [PBGC].
Given the softness of funding requirements for pension liabilities, the easy road for corporations and municipalities has been to skimp on funding pensions, leaving a bigger problem for others to solve 10+ years later. As for municipalities, review my recent post here.
Now, why didn't the US Government insist on stricter funding standards for pension plans? Because of pushback from corporations and municipalities. The US Government hoped that their funding methods for corporations would encourage the creation of pension plans, and that corporations would be good corporate citizens, and not play it to the edge.
As for municipalities, which are not subject to ERISA, as corporations are, the government assumed that they would act in their best long-term interests. Alas, but governments are run by men, not angels.
I found each of the three stories in the book to be interesting and instructive. They are tales of people aiming at short-term results, while letting the future suffer. In the case of the NYC Subways, the plan sponsors finally fought back. With GM, they accomodated until they were nearly dead. With San Diego, they compromised until it cost them their bond rating, and many people involved got sent to jail.
As any good author would, the book offers a few solutions at the end, but it recognizes as I do, that we are pretty late in this game -- there are no "good" solutions. There are solutions that may aid future generations. An example is making municipalities subject to the funding requirements of ERISA. I agree, and add that we should apply that to Federal DB [defined benefit] plans, and Social Security too. This could be our own Sovereign wealth fund, investing overseas for the good of US retirees. (What, there is no money available to do that? What a shock.)
I would also add that the funding requirements specified in ERISA are weak. The standards for life insurance reserving are stronger. The weak standards were there to encourage the creation of DB plans. Well, you can encourage creation, but maintenance is another thing.
A certain level of overfunding is need in good times, hopefully, with discipline not to increase benefits. That overfunding is hard to achieve, because the IRS discouraged overfunding above a certain level, because it did not want companies to shelter income from taxation by contributing to the DB pension plans.
Now, I have also reviewed the book Pension Dumping. Which one is better? For the average reader, While America Aged motivates the topic better, but if you want to dig into some of the deeper issues, Pension Dumping does more. |
Good history, thin conclusions
|
| Review Date: January 11, 2010 |
| Reviewer: Robert L. Kennedy, NH, United States |
| Lowenstein has done good job of telling the history of pensions & other retirement benefits at these 3 institutions. Very readable and (mostly) very credible research. He falls flat, in my opinion, in the final chapters when he attempts to recommend solutions. He more or less suggests that little can be done to change the current dynamics. While I don't trust him to necessarily offer any practical solutions, I think the book would have been better if he had not even tried to offer any solutions. |
A good primer on our next financial crises (if it's not already here)
|
| Review Date: September 23, 2009 |
| Reviewer: Elizabeth Lemesevski, |
I enjoyed this thought provoking book very much and agree with the author that pensions loom as the next financial crisis. In particular the promises made to government employees are not going to be easily fulfilled. Just from this paragraph on page 85 I understood the crux of the issue -"As early as 1939, pension benefits had been guaranteed by the New York State Constitution - which was interprested to mean that any benefit granted to an employee at any time during his employ was forever guaranteed. Other states subsequently matched this provision."
I live in San Diego which is the focus of the last two major chapters of the book. Mr. Lowenstein helped me fit the pieces of the puzzles together that I had not been aware of before. Now I know why our city is broke.
The writer really does have a gift for making a complex financial situation fairly easy to understand and for that I highly recommend this book. I only wish that he spent more than 11 pages on "The Way Out". But, I guess that's up to us to figure out.
|
|
Archive for Retirement Articles »
While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis
No video reviews found for this product.
