Jan 7, 2002
Seeing their 401(k) plans sink with the fall of the stock market, many people are beginning to wonder just how safe and secure their 401(k) plans really are. And they are also watching what happened to employees at Enron, the largest corporate bankruptcy in U.S. history. Of the 21,000 employees at Enron, 12,000 lost most of the money in their 401(k) pension plans because their holdings were in Enron stock, and today that stock is virtually worthless. All told, those employees lost 1.2 billion dollars.
But employees at Enron are not alone. Thousands more employed by such well-known large companies as Polaroid, Lucent Technology (one of the Baby Bells that came out of the break-up of AT&T), Nortel Networks and Global Crossing have also suffered similar fates.
Companies have increasingly shifted their retirement plans – that is, when they still offer them – from the old fashioned pension plans, where there is a stipulated pension, to the 401(k) plans, which are most often laden in company stock. Certainly, the old fashioned plans were extremely inequitable, since a worker had to keep a job at one single company for at least 30 years to get a full retirement package. But the 401(k) plan is even worse. The company shifts the risk of retirement completely to the employee, and it also shifts much of the cost. Not only do workers pay for the stock out of their pay check, they also pay the exorbitant fees to the financial companies that manage it, fees that are often hidden, or very difficult to understand, but fees that the financial companies collect year in and year out, whether the stock rises or falls.
The workers have little to hope for from this capitalist world where speculation is the order of the day and where wealth is fictitious. The only guarantee that workers can give themselves is social – that is through the struggles we make collectively in solidarity with each other to improve the condition of every one.