Posted on 01/18/2005 11:58:33 AM PST by bedolido
If you have a traditional pension plan and aren’t worried about its survival, you should be paying more attention. Here are the doomsday signals and how to take action. 2004 was a terrible year for so-called defined-benefit plans, which promise a set benefit in retirement. (The plans are the opposite of defined-contribution plans like 401(k)s, which make no promises about future benefits.)
Here’s the toll: Four out of five defined-benefit plans offered by private companies are underfunded, meaning they don’t have enough assets to pay promised benefits.
Yet another huge plan -- the one for United Airlines pilots -- is about to be terminated, slicing retirees’ payouts by an average 39%, according to the pilots’ union. The UAL retirement program is the fourth pension plan with liabilities of more than $1 billion to be turned over to the Pension Benefit Guaranty Corp. (PBGC), the quasi-government agency that insures pensions, since 2002.
(Excerpt) Read more at moneycentral.msn.com ...
Very interesting article. I think it's worth noting that something like nine of the ten companies identified in this article for their pension fund woes are in the steel and airline industries.
And all are heavily union dominated.
Even worse. The Federal Gov't (meaning the U.S. taxpayer) is on the hook for these when they go belly up.
Defined benefits are doomed, kinda like social security.
Correction, if I may:
If you have a traditional pension plan and are counting on its survival, you should be paying more attention. ...;O)
The very concept of a traditional pension is obsolete... Other than government jobs, not too many places even have a traditional pension.. nor should they, they are failed models fiscally.
...and the understood role of unions in the creation of the debacle; and the facile concessions made to those unions year after year, such that the problem, if any, would not arise until the far far future. That future is now or very close!
The most efficient plan is that operated by Nucor. They simply cut workers a large check when they are complete. You'll be free to manage well or manage poorly.
After 1999 companies were allowed to siphon off money from these plans, money that didn't even belong to them. Now many plans are underfunded.... big surprise, well no;
The Supreme Court ruled unanimously in 1999 that companies do not have keep surpluses in their pension plans , even if the workers contributed to these plans through money withheld from their paychecks. Norman Stein, who teaches pension law at the University of Alabama, said, "This was a plan funded by the employees with their money, and to say that the employees don't have an interest in their own money is absurd."
http://www.laborers.org/nyt_pensions_1-26-99.html
If it weren't for the feds meddling in employes money to begin with then we would not have had to pitch in now, and as voters who allowed this to happen then the we the people as the government should be responsible for damages to these plans.
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