Editor's note: The following story ran Oct. 27, 1991, on Day Eight of the nine-day "America: What went wrong?" series published in the Inquirer.
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The lesson for today is the American pension system.
It is subtitled: What to look forward to when you retire.
The text is drawn from the government rule book, with its contradictory and often-overlapping laws relating to pensions.
Here are the highlights:
Label this pension chaos.
Then understand that, barring a massive revision of the rule book by Congress, these conditions will continue to deteriorate.
In the meantime, watch for the coming war between those who work for government and those who don't.
It will come when workers in private industry realize how much power public-employee pension funds wield.
For example, local and state government workers, teachers and community college professors in Oregon benefited handsomely when their pension fund sold its stock in NI Industries Inc. early in 1985.
NI Industries, formerly Norris Industries Inc., was a manufacturing company based in Long Beach, Calif., that made everything from plumbing fixtures to automobile wheels.
The Oregon Public Employees Retirement System had invested $25 million with Kohlberg, Kravis Roberts four years earlier to help underwrite the Wall Street investment firm's takeover of NI Industries.
When the Oregon pension fund cashed in its chips in 1985, it walked away with a return of 268 percent.
In its annual report for that year, the pension fund pointed to the splendid results of its takeover investments, saying that its "leveraged buyout investments . . . continue to do well. The sale of the $25 million investment in NI (resulted) in cash proceeds exceeding $92 million."
That was good for Oregon's public employees.
It was not so good for workers at NI Industries.
After Kohlberg Kravis took over the company with the backing of Oregon's public-employee pension fund money, it raided the pension plan of workers at NI Industries.
Documents filed with the Pension Benefit Guaranty Corp. show that, in December 1983, the company's new owners removed $23.3 million from a pension plan - or 61 percent of the plan's total assets of $38.3 million.
That left the 2,908 workers covered under the plan with an average of $5,158 each to be invested for their lifetime retirement benefits.
By comparison, workers in the Oregon Public Employees Retirement System had, on average, assets of more than $33,000 each to provide for their retirement years.
To make matters worse for NI workers, the raid on their pension plan was followed in later years by plant closings and the elimination of their jobs.
Public pension systems across the country are reaping billions of dollars doing the same thing that the Oregon Public Employees Retirement System did.
They invest in corporations and then encourage restructuring or other business decisions that lead to curtailed pension benefits for workers in those corporations, the elimination of their jobs, or both.
As a result, workers in private industry who pay taxes that pay the salaries of public employees are losing their pensions and jobs because of investment decisions made by pension funds representing those public employees.
To put it more bluntly, the textile worker who lives down the street from a county courthouse worker stands a good chance of losing a portion of his or her pension benefits, job, or both, to provide a better pension for the courthouse worker.
The statistics tell the story. Take the average annual pensions for 1990:
A retired federal worker received $12,966.
A retired local or state government worker received $9,068.
A retired private-sector worker received $6,512.
Actually, the situation is much worse than the numbers suggest.
First, virtually all public-pension plans are underfunded. Guaranteed, to be sure, but underfunded nonetheless.
That means a pension fund does not have enough money to pay the benefits it has promised to the workers enrolled in the plan.
Underfunding is growing in public-pension systems across the country, meaning that taxpayers eventually will have to make up the difference.
Second, nearly everyone who works for local, state and federal governments is covered by a pension plan that guarantees a fixed retirement check every month - long considered the best of all available retirement-plan options. But less than 30 percent of workers in private industry are covered by such defined-benefit plans.
Third, many public-employee pension plans provide for mandatory inflation adjustment - that is, the retiree's benefit check is increased as the cost of living goes up. But mandatory inflation adjustments are rare in private pension plans.
Finally, the private pension system is deteriorating at the same time that there is a growing recognition - albeit grudging - that the Social Security system will lack the resources to provide for many of these same workers.
Welcome to the 1930s.
* * *
Americans can expect little help from their government as they try to wade their way through the morass of laws, rules and regulations that govern pensions in this country.
Consider the testimony of a top Labor Department official before a congressional subcommittee in April 1989.
David M. Walker, assistant secretary of labor for pension and welfare benefits, told the members that when a company terminated a pension plan it was required to replace it with an annuity that would provide the retirement benefits that had built up.
"Annuity contracts must be purchased to secure the value of those accrued benefits," Walker said, adding:"The bottom line is that participants are fully protected with regard to their accrued benefits when there is a termination."
There's one problem with that last statement. It isn't true.
Payment of so-called defined-benefit pensions is guaranteed by the Pension Benefit Guaranty Corp., a quasi-federal agency. If a company reneges on its pension commitments, the PBGC issues the monthly pension checks to retired workers.
That is not the case with annuity contracts. Annuities are not guaranteed by the PBGC or any other governmental agency.
For this, you can thank Congress, which wrote the rule book in such a way as to permit companies to terminate a pension plan, buy annuities for its workers that will pay the accrued benefits, and keep for themselves whatever accumulated money is not needed to pay for the annuities.
It did not require them to guarantee, or insure, the annuities.
At the same time that growing numbers of employees are being asked to make sophisticated judgments on how to set aside their money for retirement, companies that have long provided fixed pension benefits are abandoning such plans in droves.
Each year, beginning in 1950 and continuing through the 1960s and '70s, corporations spent a steadily growing amount of money on retirement plans, according to their federal income tax returns.
In 1950, corporations claimed $1.7 billion in pension plan contributions. That rose to $4.6 billion in 1960, to $12.2 billion in 1970 and to $51.5 billion in 1980.
That's as it should be. Every year there are more workers. Every year there should be a larger sum set aside for their pensions.
And so it went until 1983. That year, corporate pension contributions peaked at $54.4 billion. Then, while the number of workers in the country continued to rise, the money earmarked for their retirement began to go down.
Corporate pension contributions dropped to $52.6 billion in 1984, dropped again to $48.2 billion in 1986, and dropped to $45.2 billion in 1988, the latest year for which complete tax statistics were available.
During that same period, the number of workers enrolled in a primary pension plan increased from 39 million in 1983 to 41.2 million in 1986.
Of course, more than half of all workers are employed by companies with no pension plan at all. But that's another matter.
So what are corporations doing with the money that once went for pensions?
A large chunk of it is going to pay interest on the staggering debt incurred during an uncontrolled binge of borrowing in the '80s.
In 1950, for every $1 million that corporations contributed to pension plans, they paid out $1.6 million in interest on loans.
As late as 1968, interest payments still amounted to just $1.9 million for every $1 million in pension contributions.
But by 1986, corporate interest payments were consuming $5 million for every $1 million that businesses allocated for their employees' retirement.
Looked at another way, in 1986 corporations contributed to pension plans an average of $1,171 for every worker.
They paid an average of $5,942 per worker in interest on corporate debt.
America's corporate pension system is especially grim for women, who have entered the workforce in massive numbers during the last three decades.
Labor Department statistics show that in 1988 the median private pension income for single women was $2,153. Half of all unmarried women received more than $2,153, half received less.
The $2,153, of course, is for a full year. That's $41.40 a week.
More pointedly, the median pension income of single men was $3,820. Thus, single women received 56 percent of the pension income of single men.
That was down from 74 percent in 1976, when the median pension income for men was $1,830, compared with $1,350 for women.
Thus, in 12 years, the amount of single women's pensions fell from about three-fourths that of men's pensions to about half.
This despite the fact that women live longer, that more women than ever are working, and that more women than ever are collecting pensions.
Married women in the workforce are faring no better. Their median pension in 1988 was $1,848. For married men it was $4,285.
That meant the pension of a married woman was 43 percent of the pension of a married man.
That figure, too, is down from 12 years earlier.
In 1976, married women got $1,310, or 61 percent of the $2,150 pension of married men.
Since women outlive men, on average, by seven years, and since most private pensions are not adjusted for inflation, the pension dollars that women eventually receive are worth even less.
All the current evidence suggests that this pattern will continue.
Congress' tax-writing committees have heavily skewed the tax law against most women.
Women who work outside the home are most often employed in the service sector - retail sales, clerical - which generally provides inferior pension plans compared to manufacturing.
Even women who work in manufacturing tend to be clustered in businesses with the poorest pension plans, such as the textile industry.
What is happening to women is just one of the ways people can be victimized by the lack of a coherent pension system.
* * *
It began with the demise of the Studebaker.
The Studebaker Corp. dated from 1852, when the brothers Studebaker, Clem and Henry, built their first covered wagon. They equipped the Union army with wagons during the Civil War and turned out their first horseless carriage in 1904.
For the next 60 years, Studebaker manufactured automobiles - sometimes with a styling flair, as with the 1950 Champion - at a sprawling plant in South Bend, Ind.
The same year the Champion debuted, Studebaker Corp. established a pension program. In a booklet distributed to employees, H. S. Vance, the company president, said the plan"carried forward the Studebaker tradition - concern for the employees of the company and their family."
The booklet, illustrated with a series of drawings depicting a life of leisure, began:
"You may be a long way from retirement age now. Still it's good to know that Studebaker is building up a fund for you so that when you reach retirement age you can settle down on a farm . . . visit around the country . . . or just take it easy . . . and know that you'll still be getting a regular monthly pension paid for entirely by the company."
Reality fell far short of the promise.
In 1964, after years of dwindling sales, Studebaker closed the South Bend plant. More than 5,000 workers lost their jobs.
Those workers who already had retired, or who were 60 and eligible for retirement, received their promised pensions.
Everyone else - more than 4,000 workers - divided up the $2 million or so that remained in the pension plan. That averaged out to lump-sum payments of $197 to $1,757, depending on seniority.
Seven years later, in 1971, when Congress began to seriously study the pension issue, Studebaker workers traveled to Washington to testify before the Senate Labor Committee.
Lester Fox, one of those workers, summed up the issue:
"At the time of the plant closing, I was age 40 . . . with 20 years of accredited service toward my pension. I received a lump-sum payment of $350 as my share of the residue of the pension trust. . . .
"The problem . . . is that in this instance, in excess of 4,000 workers who had a promise of a private pension plan witnessed it vanishing before their very eyes. . . .
"I commend those who are considering legislation that would provide for a public reinsurance of private pension plans, and I would view that as something similar to the Federal Deposit Insurance Corp., which insures private savings."
More years of congressional wrangling slipped by, until 1974, when lawmakers enacted the Employee Retirement Income Security Act (ERISA). The act set standards for the first time that companies would have to follow if they maintained pension plans.
A key provision established the Pension Benefit Guaranty Corp., which would guarantee payment of pension benefits if a company failed to pay.
When President Gerald R. Ford signed the law on Labor Day 1974, he declared:
"I think this is really an historic Labor Day - historic in the sense that this legislation will probably give more benefits and rights and success in the area of labor-management than almost anything in the history of this country. It certainly will give to those 30-plus million American workers a greater degree of certainty as they face retirement in the future."
So how goes it, 17 years after the historic passage of ERISA?
Again, some statistics:
From 1975 to 1980, the number of workers participating in a pension plan insured by the PBGC rose to 29.7 million, from 26.8 million.
It has been downhill ever since.
From 1980 to 1988, the latest year for which figures were available, the number fell from 29.7 million to 27.8 million.
During that time, employment rose from 78.3 million to 93 million.
Thus, while the workforce grew 19 percent, the number of workers with insured pensions fell 6 percent.
And the percentage of the workforce covered by such plans is declining.
Since passage of ERISA, the share of the workforce enrolled in a pension plan guaranteed by the PBGC has fallen steadily from 39.4 percent in 1975 to 29.9 percent in 1988.
As those statistics suggest, the number of workers without guaranteed pensions, or with no pension coverage at all, has climbed sharply since Congress set out to protect the private pension system.
One reason: Many companies pulled out of the guaranteed-pension program when their PBGC premiums soared. They were getting stuck paying for the insured pensions of the retirees of bankrupt companies.
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While tens of millions of workers have fared poorly under the existing system, corporate managers and takeover artists have profited handsomely from it.
They did so by raiding pension funds - a practice made possible by the way the federal government wrote the rule book.
During the 1980s, nearly 2,000 businesses dipped into their pension funds and removed $21 billion.
That is enough to provide pensions of $800 a month to a quarter-million retired workers. And their spouses. For the rest of their lives.
The $21 billion does not count the billions that businesses diverted to other uses after substituting inferior pension plans for the plans that had been in place for decades.
How does a company go about extracting money from its employees' retirement bank?
In order to withdraw money, a company must certify that the pension plan has more assets than are needed to meet its retirement obligations.
As noted earlier, Congress wrote the rule book in such a way as to permit companies to terminate a pension plan, buy for its workers unguaranteed annuities that will pay the accrued benefits, and keep what is left over.
The losers in the transaction are the employees, who virtually always end up with smaller retirement checks than under the old plan.
What's more, most companies that terminated their defined benefit plans - plans that promise a specified amount to a retiree - replaced them with defined contribution plans, meaning, in most cases, even lower retirement benefits in the future.
Under a defined contribution plan, an employer agrees to set aside a fixed amount of money for an employee's retirement. How much the employee eventually receives depends on how well that money in invested. In most cases, it is substantially less than what a defined benefit plan would provide.
Most significantly, neither the annuities nor the defined contribution plans carry a government guarantee.
About 23,000 former and current employees at the Cannon Mills Co. textile plants in North Carolina, South Carolina and Georgia learned that lesson the hard way.
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For years, workers at Cannon Mills, headquartered in Kannapolis, N. C., were covered by a pension plan that was insured by the PBGC. That changed after a corporate raider by the name of David H. Murdock appeared on the scene in 1982.
Murdock now is chairman and chief executive officer of Dole Food Co., whose products include Dole pineapples and bananas, and he is a member of the Forbes 400, the Who's Who of the nation's rich.
Murdock, with a personal fortune that Forbes estimates at $1.3 billion, is involved in a number of businesses and is a major fund-raiser for the Republican Party.
When Murdock launched his takeover of Cannon Mills, it was the last of the large family-controlled textile businesses. Cannon employed about 24,000 people at 22 plants, producing towels, sheets, other bedding accessories, kitchen products and rugs.
The company was profitable, had extensive real estate holdings and no debt. It was run in much the same paternalistic way as it was in 1906, when it was founded. The company still owned 1,600 homes in Kannapolis, which it rented to workers for $20 to $85 a month.
As was the practice in the 1980s, Murdock bought Cannon Mills with mostly borrowed money and then used company revenue to pay the debt. To that end, he eliminated the jobs of 2,000 workers and sold the company houses.
In January 1986, four years after acquiring Cannon Mills, Murdock decided to move on. Before selling the company, he terminated the pension plan covering 23,000 workers.
PBGC records show that the plan's assets at the time were valued at $102.8 million. Murdock removed $36.6 million, contending that the remaining $66.2 million was enough to guarantee pensions.
He invested the $36.6 million in stock of two companies that were potential takeover candidates and used the leftover $66.2 million to purchase annuities from an insurance company for Cannon Mills workers.
But the annuities, unlike the pensions they replaced, weren't guaranteed by the PBGC.
And they were purchased from Executive Life Insurance Co. in Los Angeles - the same Executive Life that had sunk billions of dollars into junk bonds sold by Michael R. Milken of Drexel Burnham Lambert Inc.
The same Executive Life Insurance Co. that was seized by California officials in April in what has become the nation's largest insurance company failure.
The same Executive Life Insurance Co. that has reduced the amount it pays each month to pensioners and other annuity holders, including retirees of Cannon Mills. They are now receiving only 70 percent of the pension benefits they had been promised before Murdock dipped into their plan.
As for Murdock, he converted the $36.6 million he had withdrawn from the pension plan into a handsome profit. When he sold the stock in the takeover companies, he reaped a $60 million profit on his investment.
While Murdock was raiding the pension fund of a single company, others were launching multiple raids.
Among them: Meshulam Riklis of Beverly Hills, Calif., and Victor Posner of Miami Beach, Fla., the two elder statesmen of American business who were using borrowed money to make their fortunes long before the coining of the phrase junk bonds.
Riklis, at 67, may be best known for spending millions of dollars over the last decade to promote the singing-acting-entertainment career of his second wife, 36-year-old Pia Zadora, whom he met when she was 17.
In October 1985, Riklis' Faberge Inc. removed $6.2 million from its employee pension fund of $18.2 million.
That same month, Riklis' McCrory Corp. removed $11.1 million from its employee pension fund of $87.5 million.
And in March 1986, Riklis' Kenton Corp. removed $12.6 million from its employee pension fund of $18.9 million.
Over a six-month period, the three Riklis companies withdrew a total of $29.9 million from employee retirement plans.
After the $11.1 million was extracted from the McCrory pension fund, the remaining $76.4 million averaged out to $5,045 to be invested for each worker covered under the plan.
Many of McCrory's 26,100 employees, though, were not eligible to participate in the pension plan. Among them were 9,360 workers who earned less than $4,000 a year.
And nearly two-thirds of the 15,140 employees enrolled in the retirement plan earned less than $10,000 a year.
As for Riklis, his compensation from the various companies ranged upward of $4 million a year. That was complemented by a retirement package of more than $100,000 a year for life. And then for his wife. For life.
Victor Posner, at 72, is a Riklis contemporary. He works out of a fading, onetime hotel and apartment house in Miami Beach.
Posner has maintained a lavish lifestyle. At various times, corporate funds have been used to pay for Posner's yachts and horses.
PBGC records show that, like Riklis, he began raiding pension funds in the 1980s.
First came the Graniteville Co. of Graniteville, S. C. A textile company with a rich history dating to the mid-1800s, Graniteville was taken over by Posner in May 1983.
That month, Posner's Graniteville removed $15.4 million from a company pension fund.
In July 1984, Posner's Pennsylvania Engineering Corp., a Pittsburgh-based engineering and construction company, removed $2.4 million from a pension fund.
In June 1985, Posner's Royal Crown Companies Inc., a Miami soft drink distributor, removed $1.9 million from a pension fund.
In April 1986, Posner's National Propane Corp., a New Hyde Park, N. Y., liquefied petroleum gas distributor, removed $1.1 million from a pension fund.
In June 1986, Posner's Birdsboro Corp., a Birdsboro, Pa., foundry whose corporate ancestors manufactured muskets for the Revolutionary War, removed $4.4 million from a pension fund.
In June 1987, Posner's Salem Corp., a Pittsburgh industrial furnace and mining equipment manufacturer, withdrew $3.5 million from a pension fund.
In December 1987, Posner's Enro Shirt Co., a Louisville, Ky., shirtmaker, withdrew $1.5 million from a pension fund.
Finally, in November 1988, Posner's Fischbach Corp., a New York engineering firm, withdrew $35 million from a pension fund.
That brought to $65.2 million the total that Posner companies drained from the pension funds of nearly 4,800 employees.
In the case of one of his companies, Sharon Steel Corp., Posner never put the money into the pension fund in the first place.
In a report filed with the Securities and Exchange Commission in April 1986, the company said it had postponed $27.8 million in pension contributions that it was required to make for 1984 and 1985. At the time, Sharon Steel's pension plan was $105.6 million in the hole.
Earlier this year, the Pension Benefit Guaranty Corp. reported that Sharon Steel now ranks third among the 50 corporations with the largest percentage of unfunded pension liabilities.
The PBGC report puts the steel company's employee-retirement obligations at $264 million and the pension fund's assets at only $86 million, leaving the pension plan short $178 million.
That means all the other businesses that contribute to the PBGC will be obliged to pick up the tab for the retirees of Sharon Steel, which has been in Bankruptcy Court since 1985.
In the meantime, Posner was indicted on charges of tax evasion and filing false tax returns.
In September 1987, Posner pleaded no contest to charges of filing false income tax returns. U.S. District Court Judge Eugene P. Spellman in Miami found him guilty, but delayed sentencing. Posner faced a maximum of 40 years in prison and payment of fines, back taxes, penalties, interest and the cost of prosecution.
In February 1988, Spellman ordered Posner to pay a fine of $75,000, back taxes and penalties of $2.1 million, and interest on that sum, which totaled about $2 million. He also ordered Posner to devote 5,000 hours to community service.
There is a historical footnote to this story:
In 1977, the SEC cited Posner for diverting Sharon Steel pension fund assets to his personal use. He signed a consent decree promising not to violate the law in the future.
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Government officials and corporate executives are fond of saying that most private pension plans are overfunded.
That is, the plan's paper assets - the value of the stocks, bonds and other investments it holds - exceed the amount of money that will have to be paid to future retirees.
Therefore, they argue, the extra money belongs to the company, not the employees - even though in some cases it was set aside for pensions in lieu of raises.
On the other hand, when a plan is underfunded, those same executives often refuse to make the additional contributions needed to make the plan solvent.
It is the ultimate coin-toss game: Heads, the company wins; tails, the employees lose.
If a company terminates a pension plan and buys uninsured annuities, it gets to keep the leftover cash. But if the pension fund lacks sufficient cash to pay the promised benefits, it becomes the PBGC's problem.
Or if the PBGC insurance fund goes the way of the Federal Savings and Loan Insurance Corp. insurance fund - broke - it will be the taxpayers' problem.
In other words, today's overfunded pension plan may be tomorrow's underfunded plan.
Witness the experience of the Boise Cascade Corp.
In 1984, assets in the Boise pension fund amounted to $522 million. Employee retirement benefits totaled $373 million.
That meant the plan was overfunded. It had $149 million in what pension raiders like to call"excess cash."
Earlier this year - just seven years later - the Pension Benefit Guaranty Corp. released a list of 50 companies with the largest underfunded pension plans. Among those cited: Boise Cascade, which was $32 million short.
And remember that once upon a time the Chrysler Corp. pension plan was adequately funded. Today, according to the PBGC estimates, there is a $2.6 billion deficit.
An Inquirer analysis documented scores of instances in which a company's decision to dip into the retirement fund of its employees was followed in a few years by Bankruptcy Court proceedings, corporate restructurings, the elimination of jobs, or all three.
Take SCOA Industries Inc., a publicly owned, mini-retail conglomerate that in 1985 was headquartered in Columbus, Ohio.
In December of that year, a Boston buyout firm, Thomas H. Lee Co., joined forces with Wall Street's money-raising takeover machine, Drexel Burnham Lambert, to take SCOA Industries private.
The stock buyout cost more than $600 million - most of it borrowed. Drexel Burnham and the Lee company, headed by Thomas H. Lee, a nephew of SCOA's chairman, picked up millions of dollars in fees, as well as nearly 50 percent of the stock in the new company.
At the same time, SCOA Industries dipped into a company pension fund and removed $43.7 million. Soon after, the company began selling off some of its holdings to pare down the debt incurred in the buyout.
The $43.7 million extracted from the pension fund amounted to 57 percent of the fund's assets. That left $33.3 million, or an average of $3,299, to provide lifetime retirement benefits for each of the 10,102 employees covered under the plan.
Two years after taking SCOA Industries private, Drexel Burnham and the Lee company announced plans in April 1987 to take the successor business, Hills Department Stores, public. They sold more than four million shares of stock and issued $40 million of debt that could be converted into stock.
In February 1991, Hills Department Stores, burdened with a crushing debt arranged by Drexel Burnham and the Lee company, filed for bankruptcy protection in New York.
The 1985 raid on the company pension fund had been a precursor of what was to come, just as similar raids were at scores of other companies examined by The Inquirer.
In June 1984, the owners of Ames Department Stores Inc., the discount retail chain headquartered in Rocky Hill, Conn., removed $1.7 million from a company pension fund.
That was 57 percent of the pension fund's total assets, leaving $1.3 million - or an average of $458 - to provide retirement benefits for each of the 2,904 employees covered under the plan.
Six years later, in April 1990, Ames filed for bankruptcy protection. The company that once operated nearly 700 stores under the Ames and Zayre names, mostly on the East Coast, closed 220 stores and dismissed 18,000 employees.
Another: In December 1987, the owners of Morse Shoe Inc., operators of the Fayva shoe store chain headquartered in Canton, Mass., removed $8.3 million from a pension fund.
That was 35 percent of the pension fund's assets, leaving $15.4 million - or an average of $5,477 - to provide lifetime retirement benefits for each of the 2,812 employess covered under the plan.
Three years later, in January 1991, Morse Shoe filed for bankruptcy protection.
To be sure, such pension-fund raids ran their course during the 1980s. After 10 years and the removal of billions of dollars from retirement plans, Congress got around to rewriting the rules to take some of the profit out of the practice by imposing stiffer excise taxes.
But that doesn't mean the pension-raiding era is over. Far from it.
Last year, Congress quietly slipped a new provision into the government rule book that permits corporations to use their pension fund money for another purpose:
To pay for employee health care expenses.
As The Inquirer noted Friday, corporations are already cutting back on health-care benefits as insurance premiums soar.
Now, Congress has given them a way to attack that problem: further drain pension funds.
For corporations, the best part of the deal is that the retirement payments are guaranteed by the PBGC - and ultimately taxpayers - if the pension fund runs out of cash because money was diverted to health insurance premiums.
* * *
While all this may seem to suggest an unrelievedly grim picture of America's private pension system, there are, to be sure, a few bright spots.
Some pensioners are doing quite nicely.
Last year, H. Ray Roberts of Denton, Texas, collected pension checks totaling $56,520. Paul G. Rogers of West Palm Beach, Fla., picked up $60,480. Lawrence H. Fountain of Tarboro, N. C., received $58,992. And Bernice Frederic Sisk of Fresno, Calif., collected $53,700.
In each instance, the payments exceed the average pensions received by most people after a lifetime of work - less than $7,000 a year.
But then, all four men worked for the same generous employer - you, the taxpayer.
All are retired members of Congress.
That's the same Congress which, when it came to writing a law that would insure the pensions of millions of workers, set a limit on how much the government would guarantee: as of now, it's $26,000.
Roberts, Rogers, Fountain and Sisk are not unique. In fact, they don't even rank among Congress' top 25 pension-collectors.
That distinction goes to former lawmakers who collect pensions that exceed the salaries they received when they were working - by up to 275 percent.
Suppose you once earned $25,000 in your office or factory job. You retire. The years slip by. Now you collect $50,000. Or $93,750.
That's because about 99 percent of the labor force works for businesses that do not adjust pensions yearly to account for inflation.
More typical is a pension that amounts to 25 percent, or less, of a worker's salary.
Unless you're in Congress. Then, the sky is the limit.
Consider Eugene J. McCarthy, sometime-poet, Democratic representative and later senator from Minnesota for 22 years, and perennial presidential candidate.
McCarthy retired in January 1971. His Senate salary the previous year was $42,500. Last year, McCarthy's congressional pension totaled $68,268 - or 161 percent of his salary.
Or take J. William Fulbright, the Arkansas Democrat who fashioned a reputation as a foreign policy expert during his 30 years in the Senate.
Arkansas voters retired Fulbright in January 1975. His Senate salary the year before was $42,500. Last year, Fulbright's congressional pension amounted to $82,224 - or 193 percent of his salary.
J. Caleb Boggs, the former Republican senator from Delaware, has done even better. He served six years in the House and 12 years in the Senate, separated by two terms as governor.
Delaware voters retired Boggs in January 1973. His Senate salary the previous year was $42,500. Last year, Boggs' congressional pension reached $90,348 - or 213 percent of his salary.
Finally, at the top of Congress' pension-income growth list is Frank M. Karsten, a relatively obscure Democrat from St. Louis who spent 22 years in the House.
Karsten retired in January 1969. His House salary the year before was $30,000. Last year, Karsten's congressional pension totaled $82,824 - or 276 percent of his salary.
It should be noted that other onetime lawmakers draw heftier pensions, but their salaries were larger at their retirement, or they had more years of government service.
Thus, former Speaker of the House Carl B. Albert, the Oklahoma Democrat who retired in January 1977, collected a pension of $110,124 last year. That was 247 percent of his last salary.
And Michael J. Mansfield, the longtime Democratic senator from Montana, received $149,508 - or 167 percent of his final congressional salary.
In addition to their service-based congressional pensions, many lawmakers also have established supplementary pension accounts based on other income, most notably the money they make from giving speeches.
Here again, they have amended the government rule book, time after time, to take care of themselves, while assuring workers everywhere they were merely strengthening the private pension system.
The end result has been ever greater inequities: A system that provides extraordinarily generous pensions for some, meager pensions for others, guaranteed pensions for some, non-guaranteed pensions for others.
Overlaying this chaos is another practice that Congress has elevated to an art form over the last two decades:
Enacting specific legislative packages one year, then rescinding or amending them a few years later. This has been especially true in the area of taxes and pensions.
Take tax-deductible Individual Retirement Accounts, for instance. Congress passed the universal IRA program in 1981. In a report issued on Dec. 31 of that year, the Joint Committee on Taxation explained the reasoning:
"The Congress was concerned that a large number of the country's workers, including many who are covered by employer-sponsored retirement plans, face the prospect of retiring without the resources needed to provide adequate retirement income levels."
In 1986, Congress took a different position and, depending on income levels, either limited or canceled the deductibility of IRAs.
A Congress that five years earlier had said that IRAs should be expanded so everyone could have a retirement plan now said that IRAs should be curbed because people had too many retirement plans.
Sen. Bill Bradley (D., N. J.), spoke for the revisionists: "Just giving a quick scan over the code, you find that it is possible for a family to have six or seven different pension plans. For example, you could have a 401(k) plan. . . . If you have a spouse that works as a teacher or public employee, you could have a so-called 403 plan. . . . If you have a little self- employment income, you could have a Keogh plan. If you work for a company, you will have the company pension plan. If your spouse works for another company, you will have two company pension plans.
"If you are like an increasing number of Americans who, in their work life work for two companies, you could end up with two company pension plans. If your wife or husband worked also for two companies, you could end up in a family with four company pension plans. And that is all before we even get to the question of Social Security. So that you could find a family with a 401(k) plan, a 403 plan, a Keogh, two or three or four company pensions, and Social Security."
Such a scenario is indeed possible for about 17 percent of America's workforce. The overwhelming majority are public employees - schoolteachers and college professors, local, state and federal government workers.
For the remaining 83 percent of the population, the probability of multiple retirement checks is a fantasy.
Perhaps Bradley was talking about himself and his wife. Or about any number of other members of Congress - Robert J. Dole, the Republican senator from Kansas, for example.
In 1986, Dole condemned IRAs for people who already were enrolled in a pension plan at work, saying "you shouldn't have a double dip."
Dole and his wife, on the other hand, could have a quintuple dip. Or more.
Dole will receive a guaranteed pension when he retires from Congress. He could contribute to a 401(k), and the federal government - make that the taxpayers - will match part of his contribution.
He receives a tax-free military pension of $13,728 for injuries sustained in World War II. And he has established a Keogh account to accommodate his income from honoraria, speeches and writing.
Dole's wife, Elizabeth, who held two cabinet posts, as secretary of transportation and as labor secretary, also could establish a Keogh account.
To understand how Congress has written the pension rules to favor the few, take a closer look at Sen. Dole's Keogh account.
From 1983 to 1986, Dole reported $663,857 in Schedule C income on his tax returns. That's business income - outside his Senate salary - on which the Keogh account is based.
Of the $663,857 in income, $552,414 came from honoraria that Dole received for making speeches and writing articles. He retained $167,429 of the honoraria for his personal use, and donated the remaining $384,985 to charity, as required by law.
Over the four years, Dole set aside $133,442 in the Keogh account, with some of that money coming from honoraria and the rest from other sources, such as book royalties.
According to a 1986 report prepared by E. F. Hutton & Co. projecting the retirements benefits of the Keogh account, Dole will receive a yearly pension of $59,000 from that one retirement plan alone.
Depending on when he retires from public office, Dole's congressional pension will top $90,000, giving him a minimum pension income of more than $150,000.
Now contrast that with the factory worker earning $25,000 a year, who has a wife and two children. If he's lucky enough to have a pension where he works, he also may establish an IRA, to which he may contribute a maximum of $2,000 a year.
If his employer has no pension plan - increasingly the case - he may contribute $2,250 to an IRA - but no more. His wife, who stays home to raise the family, is prohibited from having a retirement account.
This is not just to single out Sen. Dole. Other members of Congress are doing just as well - or better. And some already are collecting pension checks in addition to their congressional paychecks.
Sen. Alan J. Dixon, an Illinois Democrat and one of the Senate's many millionaires, has augmented his $101,900 congressional salary with a $30,400 pension from his years of service in state government.
Even those lawmakers convicted of crimes have done quite nicely under the Capitol Hill pension system.
Cornelius E. Gallagher, a Democrat, spent 14 years in Congress as the representative of Hudson and Union Counties in northern New Jersey before checking into a federal penitentiary in 1973 after pleading guilty to income tax evasion.
Gallagher's congressional salary in 1972, when he was indicted on charges of concealing more than $300,000 of income, was $42,500.
His monthly pension checks last year added up to $58,368 - or 137 percent of his congressional salary.
Frank M. Clark, a Democrat, represented three Western Pennsylvania counties - Beaver, Butler and Lawrence - for 20 years before voters retired him in January 1975.
Three years later, Clark was indicted on charges of income tax evasion, mail fraud and perjury in connection with placing his housekeepers and campaign workers on federal payrolls. He pleaded guilty in February 1979 to income tax evasion and mail fraud and was sentenced to two years in prison.
Clark's final congressional salary was $42,500. Last year, he collected a pension of $64,068 - or 151 percent of his salary.
And finally there is John V. Dowdy, a Democrat who spent 20 years in Congress as a representative of 18 sparsely populated counties in East Texas before going to prison in 1974 after his conviction on bribery and perjury charges.
Dowdy's congressional salary in 1973, the year before he went to prison, was $42,500.
His pension checks last year totaled $66,612 - or 157 percent of his congressional salary.
That's a weekly average of $1,281.
While Congress has guaranteed the pensions of its convicted felons, a few states have enacted legislation terminating the pension benefits of public officials found guilty of criminal acts.
West Virginia's three-term Republican governor, Arch Moore, was sentenced to five years in prison in July 1990 after pleading guilty to federal charges of tax fraud, mail fraud, extortion and obstruction of justice. He is serving his time at a camp for white-collar criminals at Maxwell Air Force Base in Alabama.
As a result of the conviction, Moore has lost his annual state pension of $20,864 and any survivor's pension for his wife.
But Moore didn't lose all his retirement benefits.
He is continuing to collect his check from the U. S. Treasury for the years he spent in Congress.
RETIREMENT PLANS DEFINED
Defined benefit plan: Employee is guaranteed a fixed monthly pension for life. Amount usually based on a formula involving employee's average salary and number of years employed. Pension payments guaranteed by Pension Benefit Guaranty Corp. Most secure of all pension options.
Defined contribution plan: A fixed amount of money is set aside for employee's retirement. Amount of eventual pension depends on how well the money is invested. Usually substantially less than defined benefit plan. Not guaranteed by government.
Annuity: A lump sum is invested for the employee by an agent, usually an insurance company. Retirement income is based on how well the investment does. Not guaranteed by government, though some are privately insured.
IRA: A tax-deferred retirement plan originally designed for employees not covered by employer plans, but later extended to many others.
401(k): A tax-deferred retirement plan that allows employers and employees to set aside money in employee retirement accounts.