← Autodidact Archive · Original Dissent · Walter Yannis
Thread ID: 18581 | Posts: 2 | Started: 2005-06-08
2005-06-08 14:34 | User Profile
[URL=http://news.yahoo.com/s/usatoday/20050608/ts_usatoday/airlineswarnofpensionproblems]Yahoo![/URL] Airlines warn of pension problems By Barbara De Lollis, USA TODAY Wed Jun 8, 7:03 AM ET
CEOs of Northwest and Delta Air Lines told Congress Tuesday they'll need bankruptcy court protection unless lawmakers give them longer to pay pension obligations.
Such court filings would be a necessary step toward abandonment of their defined-benefit pensions to a government insurer.
"Northwest has concluded that defined-benefit plans simply do not work for an industry that is as competitive and as vulnerable to forces that are largely beyond its control," said CEO Douglas Steenland, citing terrorism and oil prices. Defined-benefit plans promise a worker a specific retirement benefit calculated by years of service and pay level.
Steenland told the Senate Finance Committee that assets of Northwest's pension plans would cover less than 60% of future obligations.
Northwest and other airlines want Congress to give them as much as 25 years to eliminate such funding gaps, vs. five years allowed by current law.
Steenland told lawmakers that Northwest is not seeking a bailout. "Just the opposite," he said. "We are asking for a responsible alternative to current law that lets us pay our pension liabilities ourselves."
Delta CEO Jerry Grinstein told the panel "the pension-funding quagmire" is a "potentially insurmountable barrier" to Delta's ability to operate outside bankruptcy.
Airlines, which collectively are underfunding pensions by about $30 billion, aren't the only industry with problems.
But they caught lawmakers' attention last month when United received permission to hand over four pensions covering 120,000 workers to the government insurer, the Pension Benefit Guaranty Corp.
The plans are underfunded by $9.8 billion, and PBGC will cover about two-thirds of the shortage. It was the largest pension default in U.S. corporate history.
United has been operating in bankruptcy since December 2002. CEO Glenn Tilton told the panel that shedding pensions is the "only viable option" for positioning United to exit bankruptcy.
Many companies have fallen behind in funding their plans, blaming poor investment performance and a bad business environment.
But PBGC executive director Bradley Belt said companies' ability to mask their plans' true financial status is part of the problem.
"Companies are able to report that they're fully funded when in fact they may be deeply in the hole and getting more deeply in the hole," Belt said.
Committee Chairman Charles Grassley, R-Iowa, agreed. United used legal accounting techniques that let companies carry paper investment gains for as long as five years, even if they had evaporated.
"There's nothing unique about United," Grassley said.
"The same blinders that United put on are used by companies everywhere."
2005-06-08 16:41 | User Profile
Five to one that there is no "pension problems" with the retirement funds of any of the big companys CEO's.