Wonder how it got that way. Many of those underfunded plans were underfunded at the behest of the unions.
I'd much rather have a defined contribution plan than a defined benefit plan. There's no such thing as an underfunded defined contribution plan. Not only that, but I wouldn't want my employer owning and running my pension fund.
This is an artifact of the graduated income tax. Pensions as employee benefits are not taxable to the employer. A flat tax would eliminate the incentive for employees to want compensation in kind rather than as cash.
It shouldn't have..never...once a plan can't be funded..i.e. the implicit promises cannot be kept..the plan shoudl be terminated..assets distributed to the participants..however, "playing with the numbers".also known as changing the assumptions...is easily done...If I assume that plan assets will grow at 9% over the next 30 years, the plan can be overfunded..if I assume 4%..it will be underfunded..
They get that way because the unions strike, or threaten to strike, for higher and higher pensions and the employers promise them the higher pensions. Then the employers find themselves unable to fund the higher benefits.
I seriously doubt that. The unions would like to yank every last cent from the shareholders. If the union could get shareholder money into the pension plan, they certainly would have.