Nofsdad
Joined: 06 Jul 2003
Posts: 7090
Location: Central CA
|
|
Posted: Sun May 22, 2005 7:18 pm Post subject: Taxpayers to bail out United's pension fund?
|
|
|
http://www.miami.com/mld/miamiherald/news/opinion/11698222.htm
They keep hinting and I keep getting this creepy crawly feeling at the base of my spine that sooner or later it's going to come down to the taxpayers being forced to pay for all the crap that's going on.
| Quote: |
By its own accounting, PBGC has $39 billion on hand, but owes $62 billion. By getting a green light to dump its underfunded pension plans on the PBGC, United was released from $3.2 billion in obligations over the next five years, but this puts the federal agency deeper in the hole.
It gets worse. According to reliable estimates, private-sector pension plans are underfunded by $450 billion. Most of the companies backing these plans are fiscally sound, but that's certainly not the case for some of United's competitors. The airline industry has lost $30 billion since 2000, and if United (and US Airways before that) can use bankruptcy laws to get rid of liabilities, others will surely be tempted to follow suit.
This is where the taxpayer comes in. |
See? There's that "T" word already. And if the airlines get away with it, what happens with the other industries and companies who have sadly mismanaged their pension funds? The potential costs to the taxpayer are simply incalculable at this time so just sticking with the airlines:
| Quote: |
| PBGC is funded by investments, payments from private companies whose pensions are insured and assets from failed pension plans. But guess to whom Congress will turn for a bailout if the PBGC can't meet its obligations. That's right -- the same taxpayers who were asked to bail out the savings-and-loan industry to the tune of about $200 billion in the 1980s because government failed to provide proper regulation. |
And the government today is a whole lot less disposed toward regulation today than it was 20 years ago. Sorry if that makes me sound "left wing" folks but just read the news. That's all I do. If there had been adequate regulation or even oversight of the manner in which the corporations handled their pension funds, we wouldn't be talking about it today, now would we?
| Quote: |
| There are a number of victims here. Most American workers don't have pensions; they shouldn't be asked to pay for those who do. Companies that play by the rules and maintain healthy pension plans shouldn't be asked to pay higher premiums to PBGC to cover the failed plans of others. Nor do United's 120,000 workers escape unscathed: United's plan was underfunded by $9.8 billion, but the PBGC will cover only $6.6 billion, so many workers will see their expected benefit reduced. The corporation also sets a cap on benefits, capping payments to formerly high-paid workers -- pilots, for example -- and freezing accrual of new benefits for current workers |
Surely nobody is going to stand up and claim that United is a hero, or even a victim here. They maximized shareholder value alright, the same way that so many other corporations do so. Once again, if you can't stay in business except by committing acts such as these, just flipping maybe you don't deserve to BE in business. Oh, sorry, that requires a moral or ethical consideration.
| Quote: |
| For the short run, President Bush has proposed some reforms that take the right approach by requiring companies to fund pension plans 100 percent within seven years. He has also proposed payment of higher premiums to the Guaranty Corp |
And I can stand up and cheer for him as quick as anybody when he's truly doing something for the "little people" and I'm doing so now.
| Quote: |
| There should also be a penalty for companies that, like United, simply fail to make mandated cash payments to their plans. |
Yep.
| Quote: |
| Perhaps the greatest lesson from the United debacle -- the largest pension default since the PBGC was created -- is that planning for retirement has become increasingly difficult for most Americans. Given the shakiness of the entire pension system, it becomes even more imperative to maintain Social Security as the one solid, guaranteed benefit that every retired worker can count on. |
That's a direct quote from the newspaper, not from yours truly and similar statements have served as the end paragraph on many stories about the pension situation.
|
|