Private Pension Plans During The Great Depression

There has been a concept at the heart of what many call the “American Dream” for over a hundred years. That is, if you work hard and live an upstanding life you should be taken care of in your old age.

From 1870 to 1929 over 400 private pension plans were created for employees of businesses all over

America. The workers at these companies trusted their employers to pay out their pension plans, and it would provide them with a source of income when they were ready to retire.

In 1935 as America was just starting to pull itself out of the Great Depression, Franklin D. Roosevelt signed Social Security into law. This provided yet another way for Americans all over the country to help them save their money for retirement, with the security of the

Some employers may even offer to match you. You maintain complete custody over these accounts. The biggest risk faced when using this plan is some stocks not performing as expected, but usually the market will balance itself out. The second option is a Defined-Benefit plan, where it promises to pay those who’ve retired based on salary and how long they worked there. But if these plans fall short, it leaves the people using the plan worried that their benefits might not be safe. It also can throw the burden on whoever is there to bail them out, which is more often than not be American tax payer.

Let’s go back to the social security system. That whole operation is taking in much less than its paying out to people. According to government projections as of 2012, that can add up to a $800 billion operating deficit. Even the cushier option offered to the employees of the US government known as

FERS, which is on top of social security, is losing money thanks to rising costs. Even the god damn Post

Office is worried they won’t be able to take care of their most loyal employees.

It gets even worse when you look at the state and local governments. As of 2012, over three fifths

The liability that still remains is a jaw dropping $900 billion, and efforts already made by states have only lowered it by $100 billion.

Together, all of the unfunded liabilities in the federal government is responsible for is totaling a staggering amount of two and a half trillion dollars. Yeah, with a T. That is over 15% percent of America’s total federal debt. All coming from unpaid pension funds.

Many people reading this may remember the teachers strike in Chicago, IL back in 2012. It received huge levels of media coverage and was a hot button topic for weeks. Thousands of kids in the city stayed home, burdening their parents with the choice of taking off work to watch them or hiring a baby sitter.

Of the $10 Billion in assets that the system controls, it has needed to sell investments simply to pay the teachers. It is spitting out much more than it is taken it.

In 2013, the Chicago Public School system flipped. It now had more people that were receiving benefits from the fund than there were people paying into the fund. Not only that, but the Pension fund is only around fifty percent funded at the moment, meaning CPS needs to come up with some $9.5 billion dollars. This now has a direct effect on the schools themselves. More money being put into the