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¶ An adequate pension reserve fund, invested largely in Government or top-rated corporate bonds, and to a lesser extent in good common stocks, should be set up to assure the payment of benefits in good & bad years alike. In a feast & famine industry such as textiles, the reserve should be higher than in such steadier industries as chemicals and public utilities.
¶ The plan should be flexible. Benefits should vary with length of service and rates of pay. Instead of a mandatory retirement age, the employer should have the option of keeping valuable employees, who are willing to stay, beyond retirement age.
With the great upsurge in pension demands, there is increasing talk about lowering the retirement age. But some economists, noting that the life span is increasing, are beginning to think that the trend should be in just the opposite direction.
"Few retirements," said Harvard's Professor Sumner Slichter, "occur because the worker wishes to quit. The great majority are at the insistence of the employer or because of ... ill health . . . Adequate pensions cannot be provided at moderate cost if the usual pensions age is as low as 65. Employers and trade unions should face that fact without delay . . . Raising the usual retirement age from 65 to 70 . . . would probably increase by at least a million the number of persons between 65 and 70 years of age who are at work. These persons would add nearly one-sixtieth to the national product—in other words, they would increase it by almost $4 billion a year. The whole community would benefit from this additional output."
Lighter Jobs? Lower Pay?
For such a farsighted plan to work, there would have to be much for flexibility in retirement policies and wages for the older man. Management would have to provide lighter jobs for the aging worker; labor might even have to agree, in some cases, to an hourly wage cut for the older man. One thing is certain: higher pensions, like higher wages, will have to be paid for by industry—either by higher prices or higher productivity. And higher prices are not the answer. Said Eastman Kodak Co.'s Treasurer Marion B. Folsom, long an expert on pensions: "If we are to give more goods and services to those who no longer work, those who are working must produce more. Otherwise, everybody's standard of living will fall." That is no new problem. The U.S. economy has met it before, notably in shortening the work week. Since 1909, manufacturing hours have been cut from 52.7 to 40, while wages have risen from $10 a week to $56.33. The U.S. could lick the pension problem without devastating strikes, provided that pensions were regarded not as a gift, but as something to be earned.