CORPaTH is an alliance of financial experts, pension fund trustees, Union leaders and other professionals dedicated to rescuing the dream of a secure retirement for working people.
In just a few years, the annual CORPaTH Summit has emerged as the premier forum for analyzing the nature and causes of the worldwide pension crisis and providing workable solutions.
The problem takes many forms, but the issue affecting most Americans is their employers’ abandonment of traditional defined-benefit pensions in favor of defined-contribution plans like 401(k)s.
Here’s the difference: Defined-benefit pensions like the ones enjoyed by most Union members provide guarantees of a steady income during retirement. Defined-contribution plans, on the other hand, are funded primarily by employees and provide no guarantees at all.
In a 401(k) plan, an employee is expected to put money aside every month into a special fund which is invested in the stock market or other money-making ventures to build up equity over the years. If all goes well, the worker has gathered a nice nest egg by the time he or she retires.
The problem is things rarely work out the right way. The average worker has no idea how to properly manage funds in an investment portfolio and doesn’t have the means to endure severe downturns like the one we experienced in the Great Recession of a few years ago.
Furthermore, most workers have to deal with such competing priorities as financing a child’s wedding or college education. Confronted with few options, any choose to borrow from their retirement funds.
Because of these factors and more — such as high investment fees and longer life spans — we are heading for a catastrophe of huge proportions.
Boston College’s Center for Retirement Research finds 52 percent of U.S. households are at risk of running low on money during retirement, up from 31 percent of households in 1983.
Approximately 45 percent of all households currently have NOTHING saved for retirement, according to the National Institute on Retirement Security.
In his outstanding recent article in the Wall Street Journal, Timothy W. Martin reports how even the creators of the 401(k) plan are saying they regret the suffering their creation has caused.
“I helped open the door for Wall Street to make even more money than they were already making,” said Ted Benna, who first formulated the idea in 1980.
“That is one thing I do regret,” he told Martin.
“We weren’t social visionaries,” said Herbert Whitehouse, another innovator of the 401(k).
Damage has been done, but regrets aren’t enough to repair it. This is why CORPaTH exists.
CORPaTH is developing strategies to strengthen traditional defined-benefit pensions and reverse the trend in which employers have been pushing their workers onto 401(k) plans.
To this end, the organization is a proud supporter of the United Nations Principles for Responsible Investment. These principles encourage transparency and accountability by corporations toward their investors, which include pension funds administered jointly by Unions and their affiliated employers.
CORPaTH also advocates letting these pension funds use criteria for investment which take their own interests in account. For example, a Union fund shouldn’t be forced to invest in anti-Union companies.
Recently, we were pleased to learn Tom Perez, the outgoing secretary of Labor under former President Obama, has listened to us and issued new rules to improve corporate accountability to investors.
We have a long road ahead, but through coalitions like CORPaTH, we can make real progress toward achieving retirement security for millions of working people who deserve it.