Free Republic

Companies with corporate pensions will end up paying a price if a sweeping budget and debt deal proposed by Congress becomes law. The House of Representatives is expected to pass legislation as soon as Wednesday that would eliminate the risk of a government default until after 2016 and increase government spending for the next two years. But the plan proposes steep increases to fees that companies pay to the nation's pension insurer, to help fund the added budget spending. According to the proposed budget, companies that have defined benefit pension plans would have to increase the fees they pay to...

If you haven't taken it upon yourself to start saving for retirement, you could already be in trouble. Even worse, you could be part of a national crisis that's brewing under everyone's radars. In an earnings call Thursday, Blackstone president and COO Tony James articulated the problem and its origins. "I have the view that the hidden crisis in America that no one is talking about is what's going to happen with all of these 20, 30, 40-year-olds who no longer have corporate pension funds of defined benefit," he said. "So, they have got 401(k)s and they are making little...

Teacher pensions are a huge and growing crisis waiting to explode without major reforms, warns a new report released Tuesday by an educational think tank.“Do the math on teacher pensions and it just doesn’t add up,” argues the National Council on Teacher Quality in its report, Doing the Math on Teacher Pensions. Total unfunded teacher pension liabilities in 2014 were a whopping $499 billion dollars, the group found. That amount is surging rapidly; in 2012, the total was just $394 billion, meaning that pension debt is growing by over $50 billion a year.Some states are in a particularly huge hole....

Detroit’s bankruptcy and the problems facing its pension funds offer two important lessons to other communities. One is that state and local governments need to do a much better job managing retirement funds. The other is that they should not pre-emptively reduce hard-earned benefits at the first sign of trouble. Several state and local pension systems around the country are under serious stress. Not surprisingly the hardest hit retirement funds are in places devastated by global economic forces like Detroit, as well as inland cities in California like Stockton, which was battered by the real estate collapse and has also...

Things are getting rather interesting in the Netherlands as low interest rates have increased pension deficit liabilities. Unlike the US and other parts of Europe where deficits are ignored, Dutch law requires 105% funding and the plans fell from 152% funded in 2007 to 102% funded today. This has forced pension plans to cut benefits by as much as 7% for some trades. As might be expected, this has given rise to a 50 Plus Party, which won election to the Dutch parliament for the first time last year on promises to defend the interests of pensioners. Please consider Yawning...

Thanks to House Republicans, a major school pension reform passed by the state Senate last week could be undone. As reported by CapCon, Senators defied government employee unions by voting to close the chronically underfunded “defined benefit” school pension system to new employees, starting in 2013. If the House follows through, this would be arguably the most transformational state budget reform since Gov. John Engler signed a similar measure for state workers back in 1996. That measure has helped taxpayers avoid some $4.3 billion in unfunded liability since then. If the House fails, every new school employee hired going forward...

Battle Looms Over Huge Costs of Public PensionsBy RON LIEBER Published: August 6, 2010 There’s a class war coming to the world of government pensions. The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide. The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover...

What does IBM know that most New York lawmakers don't? Judging by Big Blue's recent announcement that it is shifting to a defined-contribution pension plan, it knows that these plans are the only way forward for any company that hopes to stay on this side of bankruptcy court. Defined contributions have been the norm among small companies for years, but old industrial giants have been slow on the draw. Some, like General Motors, are still grappling with defined benefit pension programs ... There's a lesson here for New Yorkers faced with troubled pension systems. The logic becoming so catastrophically clear...

Delphi's bankruptcy filing -- a result of mounting, unsustainable pension costs incurred decades ago -- was grim news for its creditors, its stockholders, and its tens of thousands of workers. But it was also a warning of things to come: for the entire American auto industry, and for Social Security as well. Delphi was a GM division until its spinoff in 1999. As part of that deal, America's largest auto maker granted over 4,000 Delphi employees the right to return to GM. Now, those workers are taking General Motors up on its generous promise. GM will take responsibility for their...