Pensions are becoming more and more unaffordable for both cities and employers:
This hasn’t happened overnight - someone needs to be brought to account for this. What did they do with the $700 million that it was given by the US government:
Even people with strong unions aren’t safe these days! I bet management are OK though!
Shame for the guys concerned. I retired last year and cannot imagine what life would be like if I’d been screwed out of my financial comfort.
Most Americans saw their company paid pensions and retirement health insurance taken away 30 years ago. For all the sturm und drang about the UAW’s demands for the new contract, they are trying to get back what was taken away: get rid of the multi-tier pay scheme, restore the COLA, restore retiree medical.
Pensions don’t ‘vanish’ overnight. This sound like someone hasn’t been doing their job for a long time. Aren’t these pension funds checked (audited) on a regular basis? They are in the UK.
One more reason to be self reliant.
The Captain
Totally agree with that!
The reference is to companies in the US no longer including pension plans as part of the compensation package. Not that pension plans are running out of money or going broke. This has been a trend since the 1980s.
—Peter
I didn’t watch the video, but the pensions are probably safe. Pension monies have to be kept separate from corporate funds, and can’t be used to settle company debts. Plus there is federal pension insurance, which is usually a lot less than the pension would be, but at least it is there.
The main risk to pensions is poor management. For all its faults, I prefer the 401(k) model over the pension system. The 401(k) is portable and you control it.
iirc, the Teamsters run their own pension plan, which is separate from the company. The Teamster’s pension fund has been in deep trouble for a number of years, due to the industry’s success at breaking the union, leaving too few working members to keep the fund solvent for the retirees.
I don’t know if Yellow had a different pension arrangement with the Teamsters.
Steve
Nope. The pension money is “reinvested” in the company in order to “keep the business afloat AND protect its value”. This is done at the direction of the pension fund managers–who are not very independent. Then management spends it all and the workers have no recourse.
Did “big gummit” step in after Enron’s collapse to limit the “JC’s” ability to loot the fund like that? I remember Enron “JCs” pushing their employees to put all of their 401k into Enron stock. Radio Shack’s retirement fund (company matched 80% of what the employee put in) in the 80s, was entirely invested in Tandy securities. Color Tile, a Tandy spinoff, also had the retirement fund 100% invested in Color Tile securities. When Color Tile went BK, the employees lost everything.
Steve
Asset sales may cover debts giving stockholders some hope of getting some cash. Will pensions be covered? Probably before shareholders get theirs.
When Detroit went BK, the city pension funds were regarded as “unsecured obligations”, which would put them in line behind all the holders of city bonds. City workers were looking at cuts of some 80-90%. There was some question about that, as Michigan state law says pension funds are exempt from being stripped to satisfy other obligations in a BK proceeding, but the BK was in Federal court, outside of the jurisdiction of state law.
Some local big shots pooled their money and bought out the city’s interest in the Detroit Institute of Art, and the city owned artworks within, with the proceeds used to backfill the pension fund (which had been reduced by “loans” made to the administration (pocket) of convicted racketeer Mayor Kawame Kilpatrick (28 year sentence in the Federal jug commuted by #45), and the pension fund was exempted from being used to pay off the city’s other obligations. Of course, Bubblevision paraded a stream of talking heads howling about the bond holders being “forced to take a cram down”, while the workers mostly received the pensions they had earned.
Steve