Felix Salmon

Felix Salmon smackdown watch, pensions edition

Many thanks to John Arnold for responding to my post about how he (and his foundation) should approach pension reform. We agree on many things, it turns out; but there’s one big area where we disagree, which is encapsulated most cleanly in the question of what exactly is going on in San Jose mayor Chuck Reed’s Pension Reform Act. I characterized Reed’s ballot initiative as “allowing governments to default on their pension obligations”, and “an attempt to renege on governments’ existing pension obligations”. Arnold says I’m entirely wrong about that:

How should John Arnold approach pension reform?

The other shoe has dropped in the case of the $3.5 million which the Laura and John Arnold Foundation donated to a PBS series on “pensions in peril”. The recipient of the money, New York PBS affiliate WNET, has given it back. Understanding what’s really going on here, however, isn’t easy, so bear with me on this one.

Pension politics

David Sirota has a very important scoop today: the PBS series “Pension Peril” has secretly* been funded by John Arnold, a billionaire powerbroker with an aggressively anti-pensions political agenda. This looks very bad for PBS — but it’s also bad for Arnold, who generally gets glowing press, and who would seem to have no good reason to have insisted on secrecy when writing the $3.5 million check that made the series possible.

The systemic plight of labor

blodget.png

It’s May Day, and Henry Blodget is celebrating — if that’s the right word — with three charts, of which the most germane is the one above. It shows total US wages as a proportion of total US GDP — a number which continues to hit all-time lows. Blodget also puts up the converse chart — corporate profits as a percentage of GDP. That line, you won’t be surprised to hear, is hitting new all-time highs. He’s clear about how destructive these trends are:

California’s clever opt-out retirement idea

Last year, I said that states should not adopt defined-contribution pension schemes: they should stick instead to the defined-benefit plans they’ve had until now. I still believe that — but I’m also a big fan of SB 1234, a bill making its way through the California legislature. The bill would create the Golden State Retirement Savings Trust — a kind of pooled defined-contribution pension plan for the millions of Californians who lack access to a workplace retirement plan.

Annals of dubious research, 401(k) loan-default edition

Bob Litan, formerly of the Kauffman Foundation and the Brookings Institution, has recently taken up a new job as director of research for Bloomberg Government, where he’s going to have to be transparent and impartial. But one of his last gigs before moving to Bloomberg — a paper on the subject of people borrowing money from their 401(k) accounts — was neither of those things.

Obfuscation of the day, John Hancock edition

Matt Yglesias wonders whether he should invest some of his 401(k) in John Hancock’s International Value Fund. Naturally, one of the key pieces of information about the fund that he wants to know is its expense ratio: what kind of fees does it charge?

Why states shouldn’t adopt defined-contribution pensions

Steven Greenhouse has a long article in today’s NYT about an attempt by the states to deal with their “strained” pension funds by moving to defined-contribution pension plans. Here’s the lede:

Mandating annuities in retirement

Dan Ariely had an interesting column in the latest issue of HBR, talking about how Chile forces its citizens to save money and annuitize their pensions: