Pensions: Sacred Or No?

[Dea Certe]

It seems to me a very scary trend is taking place in our industry: the scrapping of pensions. I think it's absolutely immoral and should be illegal to toss the pensions of people who have worked for a company for years, counting on that pension to get them through their "golden years."

I suppose one could argue that a company shouldn't be held responsible for its former employees and that people should take matters into their own hands through investments and savings plans.

On the other hand, our economy has taken a beating in the last few years. Many people have lost their investments, no fault of their own. Also, we are an aging population. What happens when one is too old or disabled? Do we sit on a street corner with a tin cup and sign saying "Will work for food" or "Need Money for Food"?

Should I, as a person who has worked all my adult life, never accepting any handouts, be expected to drop dead when I've exhausted my savings? What happens if I have the bad manners to outlive my money?

God help anyone who gets sick and hits their insurance cap. Or needs long-term nursing care. One burns through money and insurance quickly in those cases.

It seems to me any company that sets aside money in golden parachutes for its executives surely must be obligated to fulfill their pension responsibilites first.

It's possible we are heading this country into a blight with short-term thinking.

So, what you guys think?

Dea

 

[diogenes]

Well, first I think that any time working folks have a pile of money, that is not under their control, but due them, those that DO control it will screw the proles out of it. Doesn't matter if it's the government (Social Security) or a pension (corporate America). I guess that is further proof there isn't as much difference between the Dems and the Reps as we'd like!

It has been proclaimed in the media for 20 years that the workplace was changing, and that you could not expect to put in 20 or 30 years at 1 company. Back then, they prognosticated that a young person would hold 8 different jobs before retirement.

OK, that's fine. Why the hell didn't the groundwork get laid for portable pensions and health care? My conspiracy theory is the big money in this country despises a middle class with resources and leisure time - we excercise some say-so and that's THEIR job, damnit! And the Dems don't care for it, because they want you dependent on a gov't handout.

What I'd like to see is something that combines the best elements of Social Security and an IRA.

An individual fund. That can be inherited. That has a default setting and amount that is basically a plain vanilla mutual fund that is a broad reflection of the economy. That you, your parents, your spouse, or your employer can contribute to. That you can also direct a portion of into the funds of your choice.

Transition to this would be tricky, and I do not subscribe to screwing the old and soon-to-be-retired out of SS.

Just a thought.

 

[UAL_TECH]

Here is an interesting article on the subject:


The Benefits Trap

UT

 

[Dea Certe]

UAL_TECH,

Thanks for the link. I would urge everyone to read it all the through.

Very scary stuff. Everyone will hit with it.

Wish I had some answers or at least a crystal ball.

Dea

 

[RJcasualty]

Ralph Nader supports the proposals of the Ad Hoc Coalition to Restore Retirement Security
“FULFILLING THE PROMISES”
An Agenda To Restore Retirement Security For Millions Of Older Americans
In recent years, hundreds of large companies have broken long-standing pension and health insurance promises to their loyal, longtime employees and retirees. These unfair practices are accelerating, rather than diminishing, and are undercutting the retirement security of millions of people. The Ad Hoc Coalition to Restore Retirement Security is asking candidates for elective office to pledge to work to:


Stop companies from breaking pension promises to older employees by unfairly changing plan rules.
AT&T’s switch to a “cash balance” pension plan increased its operating earnings by millions of dollars, at the expense of long-service salaried employees who lost as much as half of their expected pensions. The AT&T employees are asking candidates to support legislation that would require companies to make good on their pension promises by giving employees the choice at retirement between receiving their promised pensions and those offered under any new rules.


Stop companies from breaking pension promises to older employees by their selling divisions.
Halliburton’s sale of its Dresser-Rand division seemed like a routine business deal, until employees learned that it would cost them the full early retirement pensions they had spent their careers working for. Although the employees continue to work in the same jobs for the new owner, a loophole in the law allowed Halliburton to shift the money put into their plan to pay their expected benefits into a plan for its own employees. The Dresser-Rand employees are asking candidates to support measures that would prevent companies from using the sale of a division as a pretext to short-change employees of their promised pensions.


Stop companies from breaking pension promises to older employees by reclassifying them.
Just as thousands of Allstate insurance agents were reaching eligibility for their promised early retirement pensions, Allstate changed their status to independent contractors, and told them they would get a small fraction of their anticipated benefits. The action increased Allstate’s reported earnings and infuriated the agents, who filed a lawsuit claiming that the reclassification unlawfully deprived them of their pensions. The Allstate employees are asking candidates to support measures to restore their full benefits.


Stop companies from breaking promises to retirees that they would pay their health insurance costs.
Thousands of GM retirees accepted early retirement packages because they were promised generous pensions supplemented by lifetime health insurance coverage. Years into retirement their companies told them that “fine print” allowed the companies to cutback (and even cancel) health insurance payments. The GM retirees are asking candidates to support measures that would make it unlawful for companies to change the rules after people have retired.


Stop companies from breaking promises to employees about the value of their company’s stock.
MCI/WorldCom employees believed their company officials when the officials told them that WorldCom was a sound investment for the employees’ 401(k) money. In fact, the officials knew that the company was in financial trouble and were selling their WorldCom stock. After the company collapsed, the employees learned that gaps in the law could prevent them from being made whole. The WorldCom employees are asking candidates to support proposals that would ensure full remedies for misrepresentations by company officials.

These are but a few of the many ways that companies have failed to keep pension and health insurance promises to employees and retirees. While we recognize that there are other retirement policies that beg for urgent attention, we believe fulfilling these commitments would be a critically important first step toward restoring retirement security for older Americans.

 

[diogenes]

I am of the opinion many companies planned to screw employees out of pensions all along. I figure a lot of the others regarded the pension plan as a 'piggy bank', to be broken in case of emergency.

If an insurance company can place a bet that you will pay them more money (plus their investment proceeds), than they will pay your estate, using actuary tables, why can't companies do the same thing? I CANNOT BELIEVE they did not know the future liability they were getting themselves into.

I believe a lot of pensions were underfunded all along (made obvious now). I believe a lot of companies let the 90's stock run up make the contributions to the pensions, rather than corporate capital. Legal, but was it financially sound? Again, obviously not.

But it sure was a heck of a way to ditch the pensions.

I also believe one of the reasons the ATSB refused UA (I mean holy cow, they gave US the $$$!!) was as of yet, UA has not decimated the pensions - a Bush priority.