The President's Commission on Pension Policy unveiled its long-awaited national retirement income policy report yesterday. Initial reaction from the pension field ranged from benevolent skepticism to hostility to a wait-and-see attitude.
As reported by The Washington Post on May 9, the principal recommendations of the commission are a universal minimum private pension system, taxation of future Social Security benefits combined with a tax break for contributions and removal of the earnings test for retirees, and an increase in the retirement age for future generations.
It also calls for a tax credit for persons with low and moderate incomes to encourage individual retirement savings, extension of Social Security to all new workers and equal pension protection for spouses.
Noting that the Social Security system will be "severely strained" to provide increased benefits in the future as the aged population multiplies after the year 2000, Chairman C. Peter McColough likened the commission's task to that of groups 20 years ago trying to establish a national energy policy. "We expect to spark a national dialogue which will lead to constructive solutions to the problems we have identified," McColough said.
He admitted that the principles were expounded with little regard for political and economic considerations. He said the staff hopes to have a cost-benefit analysis of the recommendations before the final report is released next February. He also predicted changes would be made before then.
Dallas Salisbury, executive director of the Employee Benefit Research Institute, called the interim report "an idealized view of what retirement should look like." He singled out the commission's goal of maintaining preretirement earnings after retirement. Salisbury said the commission's own actuaries said such a plan would cost a company 70 percent of payroll over 20 years and 33 percent over 40 years. Part of that amount would be offset by Social Security benefits, however.
Carmen Elio, chairman of the Massachusetts Retirement Law Commission, said he is "against the report" because it lacks documentation. "You can't operate in a cocoon," he remarked, referring to the absence of economic justification.
The Association of Private Pension and Welfare Plans opposes mandatory private pension coverage and accelerating vesting standards, which also are proposed in the commission report. Bert Seidman, director of the AFL-CIO's Social Security department, also opposes changes in Social Security, including a proposed reduction in disability benefits, as well as raising the retirement age. He does favor provisions protecting spouses and maintaining preretirement income.
The most vocal opposition came from the Citizens' Commission on Pension Policy. This group, composed mainly of persons who say they were cheated by the pension system, held a press conference to denounce the presidential commission. It claimed the blue-ribbon panel had "betrayed the little people by protecting the interests of the multi-billion-dollar pension industry."