Pension Benefit Guaranty Deficit
Pay no heed to the man behind the curtain.....and so much for the gold watch.
With all the discussion over the fundless government IOU "Social Security" system, nobody is even talking about the pension plan scandal. Since the stock market bubble popped in 2000, most pension plans are severely underfunded. The latest craze, after management cash's out and heads for the door, is to file bankruptcy to avoid paying pensions ...and a slew of bankruptcies could leave taxpayers holding the bag.
Excerpts from the Washington Post:
Steve and Jeane Derebey thought they had it made. According to The Washington Post, 52-year-old Steve was getting ready to retire from United Airlines. His $66,000-a-year pension would make it possible for him and Jeanne to relax a little...maybe even travel to visittheir grandchildren. But last year, in a Chicago bankruptcy court, United Airlines almost certainly changed the rest of the Derebeys' life.
You see, United warned that it would likely dump its pension plan onto the federal government. Under the rules of the federal Pension Benefit Guaranty Corp. (PBGC), Derebey would be left with $22,000 a year, a third of his expected benefit. Now he and his wife are hastily planning a second career, a long one, they say, maybe running their own public relations shop in Seattle.
The PBGC, the federally backed insurer of pension funds, is having to raise its premiums to cover the cost of defaulted programs, putting the plans that remain under even more financial stress. The traditional pension systems that once guaranteed a retirement income until death are in sharp decline. The airlines are only the latest industry to begin dismantling their plans. Between 2001 and 2003, 16 steel companies terminated their pension plans, leaving 256,800 workers, retirees and dependents at the gates of the PBGC.
Just last month, the PBGC announced it would take over the pension plan of Kaiser Aluminum. As more company plans go under, the PBGC has had to steadily raise the premiums it charges to insure company pensions. It still has not been enough. PBGC director Bradley D. Belt said last month that his agency's deficit for the fiscal year that ended Sept. 30 would eclipse the previous year's record $11.2 billion deficit.
Deficient as they are, those rising premiums are one of the factors pushing traditional pensions toward extinction, Schieber said. In 1978, there were 128,401 such pension plans covering nearly 41 percent of the private-sector workforce, according to the nonpartisan Employee Benefit Research Institute (EBRI). Now there are 26,000, covering just under 17 percent. "The longer-term solvency of the pension insurance program...is at risk," Belt told the Senate Commerce Committee.
See Pension Agency Issues Warning - MSNBC:
http://msnbc.msn.com/id/6198587/
With all the discussion over the fundless government IOU "Social Security" system, nobody is even talking about the pension plan scandal. Since the stock market bubble popped in 2000, most pension plans are severely underfunded. The latest craze, after management cash's out and heads for the door, is to file bankruptcy to avoid paying pensions ...and a slew of bankruptcies could leave taxpayers holding the bag.
Excerpts from the Washington Post:
Steve and Jeane Derebey thought they had it made. According to The Washington Post, 52-year-old Steve was getting ready to retire from United Airlines. His $66,000-a-year pension would make it possible for him and Jeanne to relax a little...maybe even travel to visittheir grandchildren. But last year, in a Chicago bankruptcy court, United Airlines almost certainly changed the rest of the Derebeys' life.
You see, United warned that it would likely dump its pension plan onto the federal government. Under the rules of the federal Pension Benefit Guaranty Corp. (PBGC), Derebey would be left with $22,000 a year, a third of his expected benefit. Now he and his wife are hastily planning a second career, a long one, they say, maybe running their own public relations shop in Seattle.
The PBGC, the federally backed insurer of pension funds, is having to raise its premiums to cover the cost of defaulted programs, putting the plans that remain under even more financial stress. The traditional pension systems that once guaranteed a retirement income until death are in sharp decline. The airlines are only the latest industry to begin dismantling their plans. Between 2001 and 2003, 16 steel companies terminated their pension plans, leaving 256,800 workers, retirees and dependents at the gates of the PBGC.
Just last month, the PBGC announced it would take over the pension plan of Kaiser Aluminum. As more company plans go under, the PBGC has had to steadily raise the premiums it charges to insure company pensions. It still has not been enough. PBGC director Bradley D. Belt said last month that his agency's deficit for the fiscal year that ended Sept. 30 would eclipse the previous year's record $11.2 billion deficit.
Deficient as they are, those rising premiums are one of the factors pushing traditional pensions toward extinction, Schieber said. In 1978, there were 128,401 such pension plans covering nearly 41 percent of the private-sector workforce, according to the nonpartisan Employee Benefit Research Institute (EBRI). Now there are 26,000, covering just under 17 percent. "The longer-term solvency of the pension insurance program...is at risk," Belt told the Senate Commerce Committee.
See Pension Agency Issues Warning - MSNBC:
http://msnbc.msn.com/id/6198587/
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