The $354 billion pension problem

money.cnn.com ^ | October 27, 2005 | Chris Isidore

[B4Ranch]

Changes in accounting for retiree benefits could mean harder times ahead even for healthy plans.

NEW YORK (CNN/Money) - General Motors' pension pain could soon spread to hundreds of other companies, even those offering relatively healthy traditional pension plans.

[B4Ranch]

Correction: An earlier version of this story didn't specify that the $354 billion pension shortfall was for companies with plans underfunded by at least $50 million.

[Publius6961]

That might be true, but California has a huge surprise for the greedy public employee unions (which we are about to correct next week).

Legislatures and management making promises that can't possible be kept (literally) is nothing new!

[CROSSHIGHWAYMAN]

People can't rely on company pensions or Social Security.

Company health care coverage is a luxury.

America's savings habits must change or we're headed for a national Calcutta.

[B4Ranch]

I see company health care coverage as a part of the salary a person receives.

[Snoopers-868th]

Amen!! That needs to be on every front page along with Executives should not be allowed to rape the businesses and file bankruptcy without taking their personal holdings along to court as part of a settlement.

[trek]

The solution to the pension problem is simple. Congress must modify the bankruptcy laws and make pension obligations senior to a company's debt. If you put the pensioners ahead of the bondholders in a bankruptcy then the bondholders will see to it that management funds every dime of the promised pension benefits.

[lewislynn]

I see company health care coverage as a part of the salary a person receives.

Then it should be taxed as income...be careful what you wish for.

[cynicom]

I forget the amount of "underfunding" by the government on Federal pensions. Last I knew there was zero in the bank, just a little note saying, "I promise"...

[B4Ranch]

Now you are usiong logic and morals. That won't work today, sorry.

[cope85]

unions are N.G.O of the U.N

[RichardW]

Problem? This is a national Tsuammi about to overwhelm the American taxpayer. It is going to cause a lot of pain to a lot of people but it will have to be dealt with. GM has just brought this to a head, finally. If businesses had not been given these tax breaks after WWII we wouldn't even be discussing this problem. The old saying that there is no free lunch has been proven once again.

[RichardW]

"The solution to the pension problem is simple. Congress must modify the bankruptcy laws and make pension obligations senior to a company's debt. If you put the pensioners ahead of the bondholders in a bankruptcy then the bondholders will see to it that management funds every dime of the promised pension benefits."

I like that idea a lot. That would go a long way to solving this problem.

[SauronOfMordor]

The only trhing to do about long terms problems like that is to make the shareholders take it in the pants. There is no reason shareholders should be shielded from this kind of risk.

Additionally, corporations with defined-benefits plans which are guaranteed by the federal government need to get greater scrutiny to ensure they're fully funded. Maybe we should write it in that the regulators government pensions are conditional on the pension systems they regulate staying out of trouble

[SauronOfMordor]

The solution to the pension problem is simple. Congress must modify the bankruptcy laws and make pension obligations senior to a company's debt. If you put the pensioners ahead of the bondholders in a bankruptcy then the bondholders will see to it that management funds every dime of the promised pension benefits.

An elegant solution! I like it. It will have the market enforce that pensions are fully funded much better than more government oversight will

[rawhide]

I like what you wrote and agree 100%.