ACS Position Statement

Statement on Retirement Security

ACS Statement on Retirement Security

Summary

The ACS statement on Retirement Security reviews the challenges chemical professionals face regarding retirement security. Additionally, ACS calls on Congress to deal with the major areas effecting the financial and health security of retirees.

ACS Position

The American Chemical Society (ACS) is concerned about the lack of retirement security for our nation’s scientists and engineers and, in a larger context, for all our nation’s employees. The chemical enterprise workforce is aging, with the median age of ACS membership rising from a low of 41.3 years in 1990 to a high of 47.0 years in 2005.¹ Older chemists, employed by large companies, are concerned that some of these companies are converting from defined-benefit to defined-contribution plans.

Younger chemists are finding employment in smaller companies that may or may not have adequate retirement security or health care programs. An increasing number of ACS members are ending their careers as independent contractors, with no corporate benefits. Many of those have retired from corporate jobs at an early age, voluntarily or involuntarily, and are ineligible for Social Security or Medicare.

The concerns of the ACS membership parallel those of the general U. S. population. Americans are living longer, up from an average life span of 49.0 years in 1900 to 77.6 years in 2006.² Over the last three decades, our gross domestic product has increased 176 percent³ and the average standard of living for a family of four is higher than ever. However, the economic security of our retirees is experiencing a dramatic decline. A number of developments are adversely impacting retirement security in the United States. These include:

• Companies’ inability to maintain retirement plans. Many older, established companies with large obligations to retirees and employees nearing retirement are disadvantaged relative to younger, multi-national corporations with national programs
• Changes in pension plans for mid- and late-career professionals who have limited time to address the changes
• Questions about the long-term solvency of Social Security
• Fewer retiree healthcare⁴ programs provided through employers
• Substantial change or discontinuance of health care benefits, or increased cost
• Average personal savings at their lowest point since the Great Depression⁵

Neither Congress nor the American public have reached consensus on the compromises required for sweeping changes to our national retirement programs. The solutions to these problems are complex and may involve substantial modifications of existing programs such as Social Security, the Pension Benefit Guarantee Corporation (PBGC), Medicare, and Medicaid or the establishment of new programs.

In order to address these concerns, the federal government must take action to strengthen the four legs of the U.S. retirement security “stool”—employment-based retirement plans, retiree healthcare, Social Security, and personal savings—so that American workers can look forward to a secure retirement.

In the area of retirement plans, Congress needs to take short-term action to

• Provide incentives for corporations to maintain or establish retirement plans with faster vesting rates and easier portability
• Enact mechanisms to ensure the long-term solvency of the PBGC and preserve the value of the guaranteed benefits
• Require access to independent investment advice for retirement plan participants

The key is for Congress to provide an integrated approach to the preservation of pension benefits in the United States.

Federal policies need to bring overall healthcare costs down so that both large corporations and small businesses alike can afford to offer their retirees comprehensive healthcare coverage. Absent this, too many retirees will become solely dependent on Medicare, which is not an option until age 65, and even then coverage is not complete. To help better this future, Congress could explore incentives for encouraging employers to make and maintain commitments to retiree healthcare plans.

Congress also needs to provide assurance that Social Security is viable for at least the intermediate term. Finally, in order to encourage greater personal savings, policies are needed to address education on financial planning, and systematic changes to tax-deferred (e.g. 401K) limitations.

All Americans, whether they are working as teachers, scientists, engineers, or others, deserve assurance that after a lifetime of hard work, they will be able to rely on a retirement system that functions effectively. The American Chemical Society believes that this requires a commitment by Congress to address all four legs of our retiree security stool, with particular attention to strengthening government safeguards for pension plans and encouraging employers to preserve retiree healthcare benefits.