← Autodidact Archive · Original Dissent · SteamshipTime
Thread ID: 18194 | Posts: 15 | Started: 2005-05-11
2005-05-11 10:16 | User Profile
This is huge. GM and Ford pensions are even more underfunded. Note also that the PBGC, a government enterprise (and itself $20+B in the hole), gets a stake in United.
A federal bankruptcy judge approved United Airlines' plan to terminate its employees' pension plans Tuesday, clearing the way for the largest corporate-pension default in American history.
The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United's four defined-benefit plans to the government's pension agency.
That will save cash-strapped United an estimated $645 million a year, part of the $2 billion in annual savings it says it needs to line up enough financing to emerge from Chapter 11 bankruptcy as soon as this fall.
The company's pension system was as much as $10 billion in the hole, CBS News Correspondent Jim Axelrod reports. And that's why it asked a federal judge to exempt it from the promise of paying workers by digging that hole deeper.
But, United workers stand to lose as much as one third of what was promised to them. The federal program taking over the affected workers' pension plans is itself $23 billion dollars underwater, Axelrod reports.
That one-third figure for employees translates to an annual loss of thousands of dollars off their pensions, once they are assumed by the Pension Benefit Guaranty Corp.
The PBGC, the government's pension insurer, initially opposed United's plan. But it agreed to drop that resistance last month in exchange for up to $1.5 billion in notes and convertible stock in a reorganized UAL Corp., United's holding company. [Continued at link]
The PBGC is going to have to borrow from the government so United's pensioners can cash their checks. The Treasury may run out of ink to print money with.
2005-05-11 12:54 | User Profile
Yes, this is a real turning point.
The first big corporate pension default.
GM will have to screw their workers, too.
And with this cleared in the courts I'll bet the GM Board is seriously considering Chapter 11.
2005-05-11 13:00 | User Profile
i just read this over on yahoo. yes indeed, this is big, yet not many will notice until it smacks them right in the face via job loss, tax hikes, inflation etc...
2005-05-11 13:42 | User Profile
Is anyone here surprised? :glare:
2005-05-11 16:43 | User Profile
Havent you guys heard? one of the big airline company is doing the same thing, billions of dollars of pensions gone into the twilight zone.
2005-05-11 19:53 | User Profile
[QUOTE=Walter Yannis]The first big corporate pension default.
GM will have to screw their workers, too.
I think I read somewhere that there are now more people on GM pensions than are actually working at GM....a microcosm of the Social Security train wreck.
2005-05-11 20:16 | User Profile
I am a retired cop with what I thought was a great pension plan. Yeah, right. Forgot that the democrats like to play with pension funds. Turns out that they have squandered [I][B]billions[/B][/I] on their political cronies and vote buying. Naturally, the local marxist rag will soon be running editorials on how "greedy retirees" have bankrupted the NJ Police and Firemans Retirement System.When I retired, I was paying about $450.00 per month into a plan (NJPFRS) that was once considered the wealthiest and most secure in the [I]country[/I]. Now look what these thieving scumbag democrat politician bastards have done to it! Of course, Jack and Jill lunch box don't want to know about this sort of thing unless it affects them personally. So far it's just a bunch of cops, firemen and other state employees that are being effected. Pretty soon though, they'll be drawn into to this cesspool also, but by then it'll be too late for them to do anything but squawk!
2005-05-12 00:33 | User Profile
Centinel,
[QUOTE]I think I read somewhere that there are now more people on GM pensions than are actually working at GM[/QUOTE]
I would say free trade is the cause of this. GM is doing less and less real work. Today's GM working putting together cars made out parts from sub-contracters in China. Today's so-called America car is mainly made in China and Japan.
2005-05-12 05:47 | User Profile
[QUOTE=Faust]I would say free trade is the cause of this. GM is doing less and less real work. Today's GM working putting together cars made out parts from sub-contracters in China. Today's so-called America car is mainly made in China and Japan.[/QUOTE]
Given that reality, is there any point in "buying American" when car shopping anymore, considering that most Jap manufacturers have assembly plants stateside these days?
The televitz news said the other day that approximately $1500 of the sticker price of every GM vehicle goes to health care costs!
2005-05-12 13:38 | User Profile
Stupid, stupid, stupid......why can't those big companys send their own people to become doctors and then have them work for the company for a period of seven years before they could go out on their own?
They could open their own hospital staffed with their own people, the doctors would change but the hospital would still be the same.
And if this was to big for one big company to handle then two or three of the same could get together and do it.
2005-05-13 00:06 | User Profile
Centinel,
Hell you can not buy American if you want too anymore. I was looking at tools a few days ago. The boxes had the names of an America corporations on them, but they were all made in China. I read Bridgeport Milling Machines are now made in Singapore out of castings made in Brazil.
Social Security is not a pension plan it never had a fund. These corporate pensions had billions they squandered and stole the money in these pension funds, there should not have been a problem.
Health Care has has been taken over by corporations who suck up as much money as the can get away with. For the most part technology reduces costs rather than raising them. I mean doing an MRI scan is cheaper than cutting someone open and having them spend a week in hospital. New technology should cuts costs not raise them. The heath care industry is run by shylocks wanting ever more money.
2005-05-13 00:58 | User Profile
According to some old-time labor lawyers I know, companies agreed to defined benefit plans (over their lawyers' advice) b/c their actuaries predicted continuous 9% annual returns for their funds. Some of them went years w/o contributing to their plans.
2005-05-13 01:42 | User Profile
[QUOTE=OPERA96]I am a retired cop with what I thought was a great pension plan. Yeah, right. Forgot that the democrats like to play with pension funds. Turns out that they have squandered [I][B]billions[/B][/I] on their political cronies and vote buying. Naturally, the local marxist rag will soon be running editorials on how "greedy retirees" have bankrupted the NJ Police and Firemans Retirement System.When I retired, I was paying about $450.00 per month into a plan (NJPFRS) that was once considered the wealthiest and most secure in the [I]country[/I]. Now look what these thieving scumbag democrat politician bastards have done to it! Of course, Jack and Jill lunch box don't want to know about this sort of thing unless it affects them personally. So far it's just a bunch of cops, firemen and other state employees that are being effected. Pretty soon though, they'll be drawn into to this cesspool also, but by then it'll be too late for them to do anything but squawk![/QUOTE]
Seems unusual to me that a civil service pension fund would go under?
2005-05-13 05:17 | User Profile
[QUOTE=Bardamu]Seems unusual to me that a civil service pension fund would go under?[/QUOTE] As stated above, the funds were squandered on (among other things), political cronies that were illegally brought into the system and became eligible for benefits, vote buying schemes and a host of other abuses, so common to politicians.
2005-05-13 09:26 | User Profile
Back in the mid 1980s there was a change in accounting rules that allowed corporations to state as assets "overfunded" pension plans.
Before that an underfunded plan resulted in a liability, but an overstated plan didn't result in an asset. This rule may have been harsh from the corporation's point of view, but it was also prudent from the workers' point of view to treat pension money with kit gloves, especially in view of the fact that the amounts were based on inherently unreliable assumptions about contingencies way out in the future, like rates of return, future cost of living increases, inflation rate, interest rates - all of that projected out decades.
Anyway, once corporations could show balance sheet assets for "overfunded" plans then corporate raiders like Milliken and Boesky could use those assets to secure junk bond funding in LBOs. And that's basically what happened. Raiding the "overfunded" pension plan was a big part of the pirhana feeding frenzy twenty years ago. It was a bit before my time (I was in grad school when that was going on), and perhaps others here could fill in on the details.
I googled up a few links on it:
History of the accounting changes:
[url]http://www.benefitcapital.com/OverUnderInfoList/CPAJournalOnline.htm[/url]
This one looks particularly interesting:
[url]http://www.findarticles.com/p/articles/mi_m3MKT/is_v93/ai_3819442[/url]