The Traditional Pension Plan Has Died  researching civil war ancestors

The traditional pension plan is a concept that has been around for a long time but is unlikely to ever be used again in American culture. Generation X will be the first generation in American history to miss out on the benefits of the pension plan, which is deeply ingrained in the fabric of our nation's roots. Companies have steadily abandoned the traditional pension plan as a result of the investment banking industry's steadfast deregulation from the early 1980s through the 1990s.

Veterans of the Civil War and the Revolutionary War received the first pension plans in the United States. Soldiers were enticed by the promise of a guaranteed paycheck in return for their service to their country, and they are still today (and rightfully so). Through the latter part of the 19th century, the idea spread to state and local governments. This one-of-a-kind retirement plan helped our government expand as a result of the recruitment of numerous employees.

The Civil Service Retirement System (CSRS) offered the first organized civilian pension plan in 1920. Nongovernmental employees were provided with benefits for retirement, disability, and survivorship by this organization. On US soil, it was the first of its kind. The American dream of retirement became a reality for civilians when the CSRS was established. Until 1987, when it was renamed the Federal Employees Retirement System (FERS), the CSRS remained in charge.

The pension plan was central to Wall Street's entire financial planning philosophy following the Great Depression. The accumulation of funds to supplement retirement took center stage as a result of the popular pension plan and social security, which made income planning unnecessary. Over the course of several decades, this practice of financial planning grew into a multibillion-dollar industry. By separating financial services, the Glass Steagall Act restricted Wall Street's ability to take on risk, allowing for steady growth that fueled the economy and established the pension as the American dream of retirement.

In the latter part of the 1980s, the conventional pension plan began to rapidly decline. Sadly, Wall Street's attempt to overturn the Glass Steagall Act and deregulate the financial sector was beginning to succeed. The Monetary Control Act of 1980 gave banks the authority to set their own interest rates for mortgage loans and certificates of deposit (CDs) as well as fixed accounts. With this act, some banks started charging CD rates as high as 20% and home loan interest rates as high as 20% (which were never before seen). Home loan interest rates were regulated by the federal government prior to this act to prevent such conduct. This eventually resulted in the 1980s recession, which saw the first decline in the number of traditional pension plan providers in US history.

Throughout the 1990s, deregulation continued to cause problems and gave investment banks complete control over all financial sectors. Again, these actions were outlawed by the Glass Steagall Act before 1980, allowing the market to continue growing positively for decades. Collateralized Debt Obligations (CDOs) were eventually brought about by the actions of our top investment banks, which ultimately resulted in the 2008 Financial Collapse. The remainder is historical past.

A growing number of deferred compensation plans replaced the pension plan's steady decline in the 1980s. The majority of employers were unable to afford to pay the pensions, so the employee was forced to bear the cost of retirement. The majority of deferred compensation plans have experienced a negative return over the past 12 years, significantly delaying many people's retirement. Volatility is still the norm, and the only real solution is hoping that the federal government will cut a check to the taxpayers.