Posted on 12/08/2005 5:26:36 AM PST by Brilliant
The United Auto Workers union, with ...backing from General Motors Corp., has stymied efforts... to pass legislation on the government insurance fund for corporate pensions.
After two years of debate -- and recent maneuvering that seemed to produce a compromise -- Republican sponsors of the House bill are becoming resigned to postponing action until next year...
Lawmakers' difficulty in passing a bill backed by the White House and, lately, many large companies, reflects the tension in pension legislation. Politicians want to shore up the federal pension insurance agency so taxpayers don't have to bail it out, as they did the savings and loan industry in the 1990s. But that means forcing companies to put more money behind pension promises...
The legislative logjam is complicated by efforts of auto unions and auto company managers to stop legislation...
The Bush administration is pushing for legislation to force companies whose defined-benefit plans are insured by the Pension Benefit Guaranty Corp. to make substantially larger contributions to their retirement plans. The PBGC, which collects premiums from participating companies, insures those benefits, and a rash of bankruptcies by steel, airline and auto industry companies has pushed the agency into the red. The PBGC recently reported long-term liabilities exceed its assets by $22.8 billion as of Sept. 30...
Without congressional action, the formula companies use to calculate payments they must make to pension plans expires on Dec. 31, and companies will have to put in much more money when the next quarterly payment is due on April 15...
Democratic lawmakers, encouraged by unions, have been reluctant to sign on to a compromise, arguing the cure could be worse than the ailment...
(Excerpt) Read more at online.wsj.com ...
This link goes to a subscription site. What's the union angle on this - why wouldn't they want companies to cough up more dough?
Mainly because the auto companies are already on the verge of bankruptcy, and putting an additional burden on them both pushes them further to the brink, and makes it more difficult for the unions to extract concessions from them.
Besides, they don't benefit if GM puts money into the pensions anyway. The PBGC will make up the shortfall with taxpayer money if GM's pension funding is inadequate.
Yes and no. PBGC will not pay the full pension amount. Workers take a big reduciton. Except the bigwigs, of course, whose full pension amount is guaranteed.
From the article:
Without congressional action, the formula companies use to calculate payments they must make to pension plans expires on Dec. 31, and companies will have to put in much more money when the next quarterly payment is due on April 15...
Killing the compromise means companies have to cough up more cash to fund their pensions than they would have to under the proposed legislation.
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