A practical fix: pension and Social Security woes can be mended.

The erosion--some say destruction--of pension plans and the Social Security system in the United States is of our own making, but the tide can be reversed. That was the message of Fred Munzenmaier, chief executive of Strategic Planning Associates LLC, at the opening session of the Retirement Industry Conference on April 19.

The basic problem is maximum man-made complexity, he said. Beginning with the Employee Retirement Income Security Act in 1974, Congress, the Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corp. have issued regulations that give employers little choice but to freeze or terminate plans. Last year's Pension Protection Act adds to the complexity.

The simple solution for fixing Social Security is to invest the current annual excess in revenues into real investments, not Treasury I.O.U.s, he said. In other words, the solution is "to fund and manage Social Security like a public pension plan." He said the standard reply is: "We can't have government investing in public markets." But Canada does, he added.

Currently, the annual cash flow into Social Security is about $79 billion, but the cash flow is expected to go negative in 2017.There are about $1.9 trillion in I.O.U. surpluses in the form of Treasury securities. Munzenmaier estimates that if these funds were invested in the stock market and earned 8% annually, the Social Security fund could have $8 trillion by 2040.At 8.5%, the fund would grow to more than $10 trillion.

To solve the private pension system, Munzenmaier said government needs to "stop solving nonexistent problems in the name of political correctness." He said it needs to look at defined-benefit plans in the context of the nation's overall financial status: a $13 trillion gross domestic product and a $2.8 trillion government budget. By comparison, deficits in private sector pension plans are small, he said.

The Conferences

The Life Insurance Conference and the Retirement Industry Conference were held in Atlanta in mid-April and sponsored by Limra International, LOMA, and the Society of Actuaries; the American Council of Life Insurers also was one of the sponsors of the Life Insurance Conference.

Conference coverage by Ron Panko.