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# A Path to Poverty
August 13 2012
Written by LAPPL Board of Directors.
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LABOR VIEWS - We’ve used this space on at least three occasions in the past two years to warn of the dangers of pushing Americans out of traditional defined pensions and into 401k plans.
Our point has been that reliable and secure retirement incomes cannot be provided by 401k plans. Moreover, traditional pension plans have stood the test of time as a cost-effective and proven retirement instrument to provide the American worker with a secure and dignified retirement.
Evidence continues to mount that we have it right. Case in point: [**Reuters’ Mark Miller column this week titled “Why you may retire in poverty”** ](http://www.reuters.com/article/2012/08/07/us-column-miller-poverty-idUSBRE8760VW20120807)notes that the steep reduction in the number of Americans covered by defined benefit pensions has significantly contributed to the looming crisis of poverty among lower- and middle-class seniors in the years ahead.
From 1998 to 2010, he writes, the percentage of Americans over 60 receiving income from a defined benefit pension fell from 52 to 43 percent; in the private sector, the decline was more dramatic, falling to just 15 percent in 2010. The trend is continuing with major corporations such as General Motors and Ford announcing plans to terminate pension plans for hundreds of thousands of retirees.
We are saddened but not surprised by a new study by the National Institute on Retirement Security. It found poverty rates nine times greater in 2010 in households without defined benefit pension income. Pensions resulted in 4.7 million fewer poor or “near poor” families and 1.2 million fewer families on various forms of public assistance.
Pension plans, like those offered to Los Angeles City employees, provide reliable, stable monthly income that retirees cannot outlive. In stark contrast, a defined contribution 401k retirement plan provides no established monthly pension, and there is nothing to fall back on when the savings account is depleted.
Common sense suggests the country is headed in the wrong direction if policies and practices are pushing more and more Americans down a path to poverty. The time is now for careful analysis and sound decision-making by government and private sector officials before millions more Americans are put at risk of living a life in retirement that no one wants to contemplate.
*(The Los Angeles Police Protective League President is Tyler Izen. [Complete board here.](http://lapd.com/about/bod/) Reach the LAPPL at: [lapd.com](http://lapd.com))*
-cw
CityWatch
Vol 10 Issue 65
Pub: Aug 14, 2012
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