The San Diego Democracy for America Meetup Group Message Board › Wanna watch the "war" at United?

Wanna watch the "war" at United?

A former member
Post #: 31
Dear Readers,

A few days ago, a judge allowed United Airlines to "bail" on its employee pension obligations. This decision cast the burden of paying its pensions on the Pension Benefit Guaranty Corporation (PBGC), a federally sustained insurance fund that is currently $23 BILLION underfunded. The PBGC only pays off at 50 cents on the dolllar owed, so United's employees will only get 1/2 of what they've earned and are owed, IF THEY'RE LUCKY. That's because this default adds $6.6 more BILLION to the underfunded portion of PBGCs obligations.

Wanna watch the war at United? Standby for "liftoff". Wanna know who the big loser will be? The WHOLE country if United is struck by its unions. That will create a HUGE hole in this country's commerce, and and equally HUGE hole in its GDP.

Wanna know who's next? It's YOU if you're on a defined-benefit pension plan. Wanna know who'll pay for this mess? It's YOU if you're a taxpayer.

Think about the ways you can get into this war on the right side.

Here is an editorial and a letter to the editor of the SacBee to fill you in.

angry

Don Hess


Editorial: The lessons of United
Pensions are at risk everywhere

Published 2:15 am PDT Tuesday, May 17, 2005

Could what happened at United happen at Delta or American? How about GM or Ford ? How about your company? For many American workers, the short, scary answer is, yes.

It's a safe bet that the decision of the bankruptcy judge who freed United to renege on its pension promises to workers won't be lost on other financially ailing companies with big pension debt. As the glut of baby boomers rush toward retirement age, promised pension benefits look shakier and shakier.

According to the U.S. Treasury Department, private-sector pensions are underfunded by an estimated $450 billion. The Pension Benefit Guaranty Corp., the government agency that insures defined benefit plans - those are retirement plans where the worker is guaranteed a set benefit for life - pegs the liability even higher. PBGC is itself underfunded by some $23 billion. Meanwhile, demographic changes, principally the longer life expectancy of baby boomers and their parents, are putting greater stress on pension funds.

More and more companies are bailing out, either eliminating retirement benefits for their workers altogether or moving to defined contributions or 401(k)-type plans that shift the risk of market losses to employees. According to the U.S. Bureau of Labor Statistics, fewer than 30,000 employers offered traditional guaranteed benefit plans in 2003, or just one in 10.

The Bush administration's flawed plan to shore up the PBGC by raising premiums from $19 to $30 per covered employee is likely to accelerate the demise of defined benefit plans to the detriment of American workers. It forces healthy companies that have acted prudently and funded their systems responsibly to subsidize the imprudent companies such as United.

Rather than accept United Airlines' pension default, critics argue persuasively that the government should have pushed the airline and its unions to renegotiate lower benefits. That would have averted a $6.6 billion hit on the insurance fund, a growing deficit that threatens PBGC's solvency and which Bradley Belt, the PBGC's executive director, told Congress last month could lead to calls for taxpayer bailouts.

That must not be allowed. American workers, a growing majority of whom have no employer-paid pensions at all, should not be taxed to pay the relatively generous pension benefits for the few workers who still have generous guaranteed benefits.

If nothing else, United's pension debacle demonstrates how urgent the need is to help the declining number of employers who still offer traditional defined benefit pensions live up to their promises. That will require a change in current accounting and actuarial rules that make it too easy for unscrupulous employers to overstate their pension assets and understate liabilities.

Finally, the United debacle should prove instructive for policy-makers in California struggling with growing public pension debt at the local and state government level. United's profligacy pales when matched against the largesse of the public pension systems, where select groups of elite employees can retire as early as age 50 with 100 percent of their pay.

As private-sector pension systems wither and die, how long will taxpayers who have no pensions continue to fund gold-plated retirements for government workers?


Letters to the editor
United's Pandora's box

Published 2:15 am PDT Tuesday, May 17, 2005

Re "United Airlines can drop pension plans," May 11: After skillfully enticing United Airlines unions to convince employees to give up benefits in two successive rounds of concessions in order to protect pensions, (salary, vacations, medical, training pay), United executives went on anyway to shift responsibility for its underfunded pension plans to the already ailing government pension agency, while giving themselves huge raises and retaining bonuses for doing such a good job at saving the bankrupt company money.

Now they are going after the "old" contracts for the coup de grace. Of course, beforehand, Glenn Tilton and his sidekicks made sure that their pensions and golden parachutes were nicely secured through Enron-like gimmicks, and they now stand unharmed, laughing their way to the banks. What a shame!

United opened a Pandora's box and Delta, American and GM, to name a few big ones, are certainly going to follow in, dragging the Pension Benefit Guaranty Corp. into insolvency for many more people not even related to the industry.

Another American tale in the making!

- Eric Chevreuil, Folsom

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A former member
Post #: 125
And REALLY irritating is the BK Judge's acceptance of the executive 'perks and privileges' while allowing the 'workers' to get screwed.angry
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