Washing our Hands of Financialized Pensions

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A Socialist Project e-bulletin ... No. 2098 ... May 21, 2020
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Washing our Hands of Financialized Pensions:
Rethinking Retirement After COVID-19

Socialists for Retirement Security

The unemployment crisis brought on by the coronavirus outbreak has suddenly destroyed the earnings of hundreds of thousands of working people in Canada. For many jobless workers, the immediate scramble to make ends meet will be followed by a struggle to avoid downward mobility and poverty in the months ahead. But the crisis is also clouding the already uncertain retirement prospects for working people. Having experienced the second market meltdown in a dozen years, accompanied by a further collapse in interest rates, many workers confront growing financial insecurity and thwarted hopes of retiring.

Thus far, unions have responded to this crisis with appeals to government regulators for relief for pension plans. They are right to do so. An immediate objective must be to stabilize these plans and prevent benefit cuts for workers and pensioners.

But on its own, this purely defensive posture is doomed to failure. The outcome of the previous crisis, which also devastated retirement savings, explains why.... Following the 2007-08 collapse, pension plans remained under unrelenting pressure from employers and governments determined to offload pension risk and to cut benefits. Uneven investment returns, weak economic growth, and low interest rates, occasioned by the same massive monetary stimulus we are seeing now, fueled these attacks. Unions spent a decade desperately trying to resist concessions and hold on to what they had.

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