plans 'inequitable', professor says
By Russ Wiles
The Arizona Republic
Thursday, Nov. 10, 2005
Have you ever thought of retirement plans and the tax
incentives that support them as discriminatory?
Sonya Michel has.
The University of Maryland professor, speaking in Mesa on
Tuesday, said the current system has tended to make things
tougher for women, some minority groups and gay couples.
"I'd say the pension system is inequitable: Everyone has to
pay in (through tax obligations), but not everyone will
benefit equally," Michel said at a forum sponsored by Johns
Hopkins University's Center for Transatlantic Relations.
The event brought a small number of French and American
scholars, consultants, journalists and some French Embassy
officials to the Valley.
Michel, who is now writing a history of U.S. pension-welfare
policies as a fellow at the Woodrow Wilson International
Center for Scholars in Washington, D.C., said women have
accumulated lower retirement benefits than men because of
smaller salaries over the years and because of child-rearing
obligations that caused breaks in their work records. The
problem shows up in fewer Social Security credits, smaller
pension benefits and slimmer 401(k) nest eggs.
All such programs are supported by the tax code, from the
payroll taxes that fund Social Security to tax deductions or
other breaks on traditional pensions, individual retirement
accounts and 401(k)-style programs.
Also, she contends that women and some ethnic minorities
were less likely to land jobs at companies offering
traditional pension programs when such plans were popular a
couple of decades ago.
For this reason, Michel said, she doesn't support a
taxpayer-funded bailout of the Pension Benefit Guaranty
Corp., should it become necessary.
"Why should all taxpayers support a fund," she asked, "when
only one-sixth of workers had the privilege" of laboring at
pension-sponsoring companies, which included some of the
nation's biggest and most prestigious firms?
Meanwhile, gay couples are hurt by Social Security policies
that don't recognize non-spouses as beneficiaries, Michel
said. IRAs and 401(k) plans don't come with this
The Mesa conference explored different ways France and the
United States are confronting aging populations and the
strain on pension systems.
Laure Delahousse, former director of retirement savings for
a French association of investment-management firms, said
she felt people in France generally were more comfortable
with their state-run, pay-as-you-go pension system compared
with Americans' support for Social Security.
Still, she noted France has adopted supplementary retirement
programs that resemble the 401(k) programs prevalent in
One recent innovation allows some workers to contribute
4,600 euros (over $5,300) yearly into their accounts, with
the money reserved for retirement or to buy a primary
The plan can be offered at companies where a labor union has
agreed to the deal.
Workers can chose among at least three mutual funds, but
they can't invest in their companies' own stock, unlike with
most 401(k) programs.
"There's a clear separation of company assets from employee
assets," Delahousse said, noting that French policymakers
learned a lesson from the Enron Corp. debacle.
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