PENSION PARADOX

About five years ago Jenny Jones and Suzie Smith graduated from high school and came to work in the Harvard Dining Halls at $500 a year. In 1937 the Pension Plan was started by the University and $12 was taken from the annual salaries of the two girls. The University added another $12 and the total annual premium of $24 was deposited in a Retirement Annuity for each girl with the Teachers' Insurance and Annuity Association. Last year they joined the A.F. of L. Dining Hall Employees Union, and, since both Jenny and Suzie face problems in connection with their Pensions, they have been agitating within the union for some action toward the solution of their difficulties.

Jenny's problems stem from the fact that last year she got married. The costs of starting a new home were tremendous and Jenny needed every cent she could get her hands on. But she was unable to touch the money which had been stored up in her. Annuity unless she left Harvard's employ and she couldn't afford to lose her job. The $50 in her Annuity were a frozen asset and she and her husband "just had to do without."

Suzie, on the other hand, had buck teeth and stringy hair and decided that she was not going to get married. But she was even in a worse fix than Jenny. If she continued to work as a waitress in the University until the retirement age of 65, contributing faithfully to her Annuity all the time, she would have a retirement income of approximately $14 per month in return for her long and loyal service.

In greatly simplified terms, the fictitious cases of Jenny and Suzie are the problems which the Administration must face in connection with the recent Union agitation about the Pension Plan. On one side is Jenny whose job is temporary, whose wages must fill an immediate need, and whose old age security lies with her husband. On the other is Suzie whose job is permanent, whose wages must fill a future need as well as an immediate one, and whose old age security depends on no one but herself.

For Jenny's case, the Union has offered a solution, the abolition of compulsory Annuities. This would enable her to use her $12 to fill the immediate need for which the money was earned. But the Union has neglected Suzie. As yet no demands by the Union or provisions by the University have been made to boost the retirement income of low-wage employees. Suzie's case is therefore far more desperate than Jenny's. Obviously Suzie can not take much more out of her present wages to contribute to the Pension Plan and still keep her financial nose above water. Yet it stands to reason that she should receive something near the $35 income which is guaranteed to waitresses outside educational institutions and who are legally included in the Government's Social Security Program. Hence the University should step in and make a concerted effort to raise retirement incomes of employees who, like Suzie, will have no other income when they reach the age of 65.