Politicians Steal Hopes for Pensions

In his column “Retiring Dishwasher Cleaning Up to Tune of $100,000” (Aug. 4), Dana Parsons tells the story of Antonio Ojeda, who will receive about $100,000 from his employer’s pension plan. It’s a good story and shows the result of a rank-and-file employee benefiting from his employer’s effort to save some income taxes.

Unfortunately there won’t be a lot of Antonio Ojedas in the future. The kind of plan that will give Mr. Ojeda all that money is becoming very rare. Why? Because in their zeal to raise revenue, Congress and the IRS have promulgated laws and regulations that discourage the establishment and continued sponsorship of the kinds of pension plans that generate benefits for the rank and file while allowing small-business owners to take profits and put them away on a tax-favored basis.

Since the passage of the Tax “Reform” Act of 1986, small businesses have faced the prospect of ever-increasing administrative costs for their plans, excise tax penalties on the funds if they were invested successfully and very restrictive limits on benefits and contributions for the owners of the businesses.

Because of these conditions, approximately 70% of all small-business-sponsored pension plans have been terminated in the last five years. Since he has little tax incentive and does not want to face the burden of large administrative costs and complicated regulations, the small-business owner has decided to just pay the tax and keep whatever is left.

Meanwhile, hundreds of thousands of Antonio Ojedas have lost or never will have a pension plan. Of course, the members of Congress, their staffs and federal employees get unrestricted pension benefits paid for by these same taxpayers.

CLINT HOPSON, Tustin