Pension Shortfalls at U.S. Firms Double

[NNN0LHI]

http://story.news.yahoo.com/news?tmpl=story&ncid=716&e=15&u=/nm/20030904/bs_nm/congress_pensions_dc

WASHINGTON (Reuters) - Pension underfunding at "troubled" U.S. companies has doubled this fiscal year and could exceed $80 billion, with airlines accounting for nearly a third of the shortfall, the government said on Thursday.

The Pension Benefit Guaranty Corp., which bails out corporate retirement plans, told Congress its own deficit grew to a record $5.7 billion as of July 31, $2 billion higher than the shortfall for all of fiscal 2002.

PBGC Executive Director Steven Kandarian called for reforms to pension rules, telling the House Education and the Workforce Committee that the cost of current pension problems would otherwise have to be met through reduced benefits, higher premium payments by companies to the agency or a taxpayer bailout.

Underfunding at "troubled" companies -- defined as those whose debt is rated below investment grade or are otherwise at risk -- could exceed $80 billion by the time the current fiscal year ends Sept. 30, Kandarian said, up from $35 billion last year.

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[Beetwasher]

1. This is a very serious and major problem

This country is very serious economic trouble...

[DifferentStrokes]

2. If you want to sign up at Business Week online

http://www.businessweek.com/@@GSx7RYQQTao5pxIA/magazine/content/03_36/b3848039_mz007.htm

or get the September 8 issue on the newstands now, you can get the details about how these slimebags have been operating.

A brief summary from The Great American Pension-Fund Robbery.

-- Project an unrealistically high rate of return and claim that the plan is overfunded. Then reduce contributions to the plan and divert the plan's assets to fattening the bottom line.

-- Convert from conventional plans to "cash-balance plans." This was invented by Bank of America in 1985 and widely imitated. Terminating a pension plan results in a large tax penalty, so consultants invented a hybrid that quacks like a 401(k) but doesn't trigger the penalty. The Internal Revenue Service went along with the fiction. . .

-- Redefine employees as independent contractors. In 2001, Allstate Corp., which had long distinguished itself by having an employee sales force with good benefits, converted some 6,400 longtime employees to independent contractors, shortchanging their pensions. (Major law suit and EEOC complaint here. Go to allstatecase.com for updates and court filings.)

- Sell off units that have older employees, who then lose their pension benefits. . . In 1998, Halliburton Co. acquired Dresser Industries Inc., then spun off its Dresser-Rand unit in 1999. (But didn't Dickie Cheney get a extra nice severance package when he left?)

-- Declare bankruptcy, but set up a special bankruptcy-proof pension plan for top executives as an <ahem> off-the-books trust. Enron Corp. did this. Last April, American Airlines Inc. tried it -- (Anybody remember the union going ballistic and a hasty exit by CEO Donald J. Carty?)

Straight out of Animal Farm, the article concludes that pension plans once intended to foster loyalty and long service are now at the service of only one class of employees. These plans are now the piggy bank available to top managers, who long ago lost interest in protecting the rights and assets of anybody except themselves.

Let them be called "liabilities" like the ordinary employee--or even outright crooks--and they cry, cry, cry.

[WillyT]

3. Jesus.... Well, I Hope People Wise Up And Vote Democrat !!!

The greed of these assholes makes Socialism\Communism seem like a path worth considering!!!

How to destroy a two century experiment in democracy in three short years!!!

FUCK!!!

:argh:

[hang a left]

4. Bush*s solution

Taxpayer Bailout

[Bandit]

5. taxpayer bailout.

Now we're talking. Republicanism on display. Tax payers will bail out the thieves again and again.

[WillyT]

6. This Is Still A Vote Winner Folks !!!

For those of you wanting to put * out with the garbage!!!

:shrug:

[TreasonousBastard]

7. We bailed out the thrifts...

why not the pensions?

Guess what? This is Clinton's fault, too. It didn't start yesterday.

For years, companies have been fooling around with pensions, but what may actually save them is the shift from defined benefit to defined contribution plans. Instead of saying you will get X% of your pay, they say y% of your pay will be invested, and you get whatever it's worth when you retire.

Of course, who's retiring anyway? Aside from having to work longer to eat, there is so much movement that not all that many people stay in one job long enough to be vested. And over half the workers aren't in any pension plan anyway. Last time I was in one was 1984.

I haven't kept up with all the changes in the law, but requirements for pension plans have been changing over the years. Needless to say, the companies are lobbying for ways to get out of paying.

I would say that covering more workers in pension plans and "floating" pensions where you don't lose your vesting when you change jobs is as important as universal health care.

[Zhade]

8. General Motors pension woes

GM, which owns the company I work for (DirecTV), was 'underfunded' by $19.3 billion last year. It needs money to cover its pensions, to prevent its employees from maybe burning corporate headquarters to the ground once they lose their pensions.

As a result, Rupert Murdoch's lesser buyout offer, proposed after being snubbed for Echostar (who was subsequently blocked from merging with DirecTV), results in less cash for GM and more control for Murdoch.

I wonder how it'll feel to be Enronized?