A System Going Under? Projected Pension Shortfalls

[cthrumatrix]

A System Going Under?
Projected Pension Shortfalls Turn Focus to Reform
By Albert B. Crenshaw
Washington Post Staff Writer
Sunday, October 19, 2003; Page F01


During his 35-plus working years at Bethlehem Steel in Baltimore, Melvin Schmeizer endured blazing heat and freezing cold, layoffs and odd shifts. But by volunteering for tough jobs and overtime, he boosted his income and, ultimately, his pension, to $2,850 a month when he retired in 2001.

But Schmeizer's retirement plans were knocked out cold last year, when Bethlehem went into bankruptcy and the Pension Benefit Guaranty Corp. (PBGC), the government pension insurance arm, took over the company's pension plans. And while that means Schmeizer's pension will not vanish, it will be cut to $1,700 a month.

Schmeizer, 56, observed wryly to a Senate committee last week that company and union officials had assured Bethlehem workers that "the sky would have to fall" for them not to get their full pensions.

"Well, the sky did fall," he said.

In fact, the sky is falling for a good number of American workers. Or the ship is sinking. Or any number of other metaphors for looming disaster, all of them applicable to the state of America's private pension system.


snip

http://www.washingtonpost.com/wp-dyn/articles/A44596-2003Oct18.html

Reform calls come at a time when "projections" for returns were to agressive and companies need to fund ....this takes away from earnings.

In the "stock market hay day" these same companies used pension "surplus" to inflate earnings.

Can't have it both ways.

[cthrumatrix]

1. How big is the Pension Shortfall..?

Sunday, October 19, 2003; Page F03


Each year the Pension Benefit Guaranty Corp., which insures corporate defined-benefit plans, estimates how much its assets are either above or below its liabilities. Last week the agency's executive director testified that it was underfunded to the tune of $8.8 billion, a swing of nearly $19 billion in only three years. Eventually, any shortfall will have to be made up through higher premiums or taxpayer subsidy. Since 1975, the majority of claims against the program have come from just two industries: airlines and steel.

http://www.washingtonpost.com/wp-dyn/articles/A44589-2003Oct18.html


Your choice ....this or $87B for Iraq?