The new Pension Protection Act the president just signed is a good law, ensuring that employers adequately fund traditional pensions if they offer them to workers, and improving the flexibility of 401(k)s. It's the sort of common-sense bill that usually goes down in partisan wrangling, but enough horse-trading was done to achieve a good measure of bipartisan support, despite vehement union opposition.
The Human Rights Campaign likes the bill, too, so we are in rare agreement. But it's interesting to note that HRC praises it because of a provision it supported that will allow anyone to inherit a 401(k) nest egg without immediately paying taxes on the windfall, a benefit that in the past was reserved for spouses.
HRC frames this as a victory for domestic partners, and it can be construed as such. But only in the sense that your cousin Joe, or your home health aide Bessie, or your best friend Ryan from college, can now be left your 401(k) without having to cash it out and pay taxes. In other words, a former benefit of marriage has now been made generally available to any non-spouse.
If we can't achieve spousal recognition for gay couples (either via marriage or federally recognized civil unions), then such "victories" may be the best we can do. And I don't want to suggest that this won't be helpful for gay partners (as well as for cousin Joe). It's just not the kind of "milestone in the ongoing fight for the rights of gay and lesbian couples" that makes me want to celebrate.
SteveS comments:
Where's the gay left and HRC on eliminating the estate tax? They're nowhere to be found because it cross-pressures their other positions and allegiences.
I've tried to get some HRC-type gay activists in Florida to bring pressure on Sen. Nelson to support repeal of the estate tax, pointing out the benefit that would mean for gay couples to pass along high-priced homes and other assets to the survivor tax free as hetero couples can. The thought had never ocurred to them and they figured that something must be wrong with it if they thought long and hard enough. Finally they said that they were opposed to incrementalism. Evidently they wanted the whole enchelada or nothing. A great example of being slaves to doctrine and group-think rather than working to achieve the achieveable.
11 Comments for “Back-Door ‘Victory.’”
posted by milo on
You’re right – it’s not the victory HRC and others have made it to be (which is probably why the Christian right wasn’t up in arms over it). It is, however, a step toward greater fairness. I may never marry, never have a spouse or partner to whom to leave my pension without them being gouged with taxes. I should be able to leave it to anyone I choose, under the same terms, which is what the provision allows. Enough with the privilieges of marriage and salivating after them. A fair and just society would not have such things exclusive to married couples to begin with. ‘Beyond Marraige’ anyone?
posted by Northeast Libertarian on
If we can’t achieve spousal recognition for gay couples (either via marriage or federally recognized civil unions), then such “victories” may be the best we can do.
Actually, these sort of victories, on a larger scale, are precisely what’s needed. Same-sex government “marriage” will make you and me more equal but it will still discriminate against others (Mormons, for instance).
The only way to truly end the farce of government bureaucrats bestowing themselves the authority over your family structure is to get government completely out of the marriage/family business.
posted by Audrey on
Let’s hope this back-door victory also has a reach-around.
posted by North Dallas Thirty on
If we can’t achieve spousal recognition for gay couples (either via marriage or federally recognized civil unions), then such “victories” may be the best we can do. And I don’t want to suggest that this won’t be helpful for gay partners (as well as for cousin Joe). It’s just not the kind of “milestone in the ongoing fight for the rights of gay and lesbian couples” that makes me want to celebrate.
(shrug) It all comes down to whether you want the name or the benefits — and whether the name is worth waiting decades when the benefits can be had fairly rapidly.
posted by SteveS on
I’m somewhat surprised to see HRC heralding this accomplishment because I’ve never known that group or other similar gay groups to support any tax/economic type legislation that would help same sex couples. Where’s the gay left and HRC on eliminating the estate tax? They’re nowhere to be found because it cross-pressures their other positions and allegiences. I’ve tried to get some HRC type gay activists in Florida to bring pressure on Sen. Nelson to support repeal of the estate tax pointing out the benefit that would mean for gay couples to pass along high-priced homes and other assets to the survivor tax free as hetero couples can. The thought had never ocurred to them and they figured that something must be wrong with it if they thought long and hard enough. Finally they said that they were opposed to incrementalism. Evidently they wanted the whole enchelada or nothing. A great example of being slaves to doctrine and group-think rather than working to achieve the achieveable.
posted by Northeast Libertarian on
Not to mention Social Security reform. Remember how NGLTF went apeshit over the proposed “reforms” (which didn’t go far enough but still. . . ) and declared they’d rather see gay spouses get NO social security benefits whatsoever, than allow individuals to plan for their own retirements rather than pour their money into that giant Ponzi scheme?
Something advocates of Social Security on the right and the left never seem to be able to explain to me is why, if SS is such a great idea and “strong” system, how come running an identical scheme as a private-sector pension scheme would get one arrested for fraud?
posted by J.P. on
Steve doesn’t mention why unions opposed the bill, and in light of a previous discussion by union supporters, it’s worth noting.
The law requires companies to fully fund their pension obligations (that is, their promises to employees). Unions want companies to be able to continue under-funding their obligations, and then when their pension accounts run out of money, to be able to dump them on the federal government (i.e., the taxpayers) to be bailed out, via the federal Pension Benefit Guaranty Corp. Unions don’t want companies that can’t set aside enough to fund their pensions to freeze them in place and instead offer 401(k)s going forward.
In other words, unions want you and me to fund our retirements, and theirs!
posted by Northeast Libertarian on
Unions want companies to be able to continue under-funding their obligations, and then when their pension accounts run out of money, to be able to dump them on the federal government (i.e., the taxpayers) to be bailed out, via the federal Pension Benefit Guaranty Corp.
I’m no fan of unions, but this is a big old load of laugable crap.
The WORST thing which can happen to a defined-benefit pension is have it dumped on the PBGC. If that happens to your pension, you get pennies on the dollar. Just ask all the TWA employees whose pensions were dumped on the PBGC after Carl Icahn sucked all the cash out of the company. . . many highly-paid pilots are getting less than half their original benefits.
There are big enough problems with the public/private pension Ponzi scheme, and no need to invent conspiracies to create further problems.
posted by J.P. on
Only in extreme cases, such as with bankrupt airlines, does the PBGC only pay off "pennies on the dollar." So, NL, why do you think Big Labor opposed the pension bill? Kindly enlighten us!
posted by Northeast Libertarian on
Only in extreme cases, such as with bankrupt airlines, does the PBGC only pay off “pennies on the dollar.”
Actually, in virtually every case, the PBGC pays off only pennies on the dollar.
Don’t take my word for it though:
To conserve cash, the PBGC has put ceilings on payouts and limited the kinds of pensions it will guarantee. These limits affect perhaps 100,000 of the 1 million retirees for whom the PBGC is now responsible, ranging from early retirees like Groff to some highly paid pensioners like pilots. Even so, an analysis by the independent Center on Federal Financial Institutions (COFFI) predicts that the PBGC will zero out its bank account in 2020.
That’s 10% of all the workers they cover TODAY — with even tighter limits likely to be imposed in the future on existing and future beneficiaries in the future.
why do you think Big Labor opposed the pension bill
Because they don’t support changes in their employment contracts, more likely. Companies which cannot deliver on their commitments shouldn’t be able to just turn around and change the contract, willy-nilly, and replace defined benefit cash set-asides with often worthless stock.
Anti-union fervor is not without basis when it comes to realistic expectations, but the willingness of the right wing in this country to absolve corporate entities (but not individuals) of all responsibility in fulfilling their contractual obligations is also appalling.
posted by Chuck on
NL, you are flat-out wrong. Every defined benefit pension states that at any time the employer-provider can terminate future obligations. That is the contract. So the employer is not violating any contract obligation.
As for collective bargaining agreements regarding pensions, employers are bound to them until they expire. In the cases of employers freezing pensions, they do not violate existing contracts (although sometimes they freeze future obligations for white-collar workers and continue them for unionized workers).
And I had to laugh when you refer to replacing pensions with 401(k)s as substituting obligations for "often worthless stock." Behold the "libertarian" with such contempt for capitalism and the stock market, the greatest engine of prosperity and wealth-creation the world has seen!