New law gives US companies a break on pensions

[Omaha Steve]

Source: AP-Excite

By ALAN FRAM

WASHINGTON (AP) - A new law will let companies contribute billions of dollars less to their workers' pension funds, raising concerns about weakening the plans that millions of Americans count on for retirement.

But with many companies already freezing or getting rid of pension plans, many critics are reluctant to force the issue.

Some expect the changes, passed by Congress last month and signed Friday by President Barack Obama, to have little impact on the nation's enormous $1.9 trillion in estimated pension fund assets. And it is more important, they suggest, to avoid giving employers a new reason to limit or jettison remaining pension benefits by forcing them to contribute more than they say they can manage.

The equation underscores a harsh reality for unions, consumer advocates and others who normally go to the mat for workers and retirees: When it comes to battling over pensions, the fragile economy of 2012 gives the business community a lot of leverage.

FULL story at link.


Read more: http://apnews.excite.com/article/20120709/D9VTHBD81.html

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In this July 6, 2012 file photo, President Barack Obama signs the Surface Transportation Bill, in the East Room of the White House in Washington. A new law reduces by billions of dollars what companies have to contribute to their pension funds, raising concerns about weakening the plans that millions of Americans count on for retirement. But with many companies already freezing or getting rid of pension plans, critics are reluctant to force the issue or even make much of a fuss. (AP Photo/Pablo Martinez Monsivais, File)

[dogman]

1. What about the Postal serice?

Was this just for private corps?

[valerief]

9. My first thought, too! What about that biggest union? nt

[Laurian]

2. Working folks stiffed again.......

I am fortunate to have retired with an excellent pension that even provides two cost of living increases per year. The pension plan is well managed and should continue to be sound for many years. I can't imagine how betrayed I would feel if I was faced with no pension after working for thirty years with an understanding that the pension would be there for me at the end. What a moral and ethical failure it is to break that contract with workers.

[Sherman A1]

4. Precisely

[jtuck004]

5. The first baby boomers were responsible for cutting taxes and shipping jobs overseas?

'Cause those things had a HELL of a lot more to do with it than someone who worked every fucking day of their life for some thief of an employer only to wind up with a crappy social security check, the only thing between them and a tragic poverty.

[Raster]

6. What a load of shit. Seriously, do you have anything to back up your bullshit?

[Kolesar]

14. I will have to forfeit two years of Social Security pension because I was born in the 1960s,

...not the 1940s.

[Raster]

15. And this is because of the first baby boomers? I don't think so.

[w4rma]

7. Companies should probably move to a "stock in the company" as a private pension system.

This way folks *can't* get stiffed, intentionally. Although, employees then have to be more picky about who they work for.

[FarCenter]

8. Another kick the can down the road until when things get better strategy.

That computation change will let companies estimate their pension fund earnings by assuming the interest rate will be near the average of the past 25 years, rather than the past two years when interest rates have been extremely low. Since they will now be able to assume that their pension investments are earning higher profits, they will be required to contribute less money from corporate coffers to make up the difference.

The problem is that things are unlikely to get better.

[Wellstone ruled]

10. Another deal blessed by

DLC creeps. Most pensions are in such bad shape due to the changing of what type of investments they can keep. Their loaded with all those bad housing bonds(CDO). Nobody has any balls to push back on the employers. If you are qualified for early draw,you better do it now.

[Wilms]

11. Well, he did promise change...

:sigh:

[cyberswede]

12. Chip, chip, chip...what's gonna happen?

Well, I suspect that workers' rights will be systematically reduced (as is already happening) until we reach a tipping point, and workers are going to have to refight the battles that were fought by the early workers' movement all over again.

There are enough people (workers and otherwise) that take for granted all the benefits that unions fought to earn over the years, and I honestly wonder how much the population at large even knows about the struggles that took place to gain the benefits workers have now.

Unfortunately, I'm afraid things are going to have to get really bad before people rise up again to fight for fair treatment - and the bloodshed associated with the early labor movement may have to be repeated.

[Marthe48]

16. Labor has lost too much already

My husband retired in 2005 with a pension and full medical benefits. He lost the medical benefits 2 years later, when the government allowed the company to open the contract and change it unilaterally. Paying for insurance coverage cost most of his pension until he turned 65. I bet you any money the union would never be allowed to open a contract and change its part of the deal--tell me I am wrong.

My mother had a foster brother who helped organize Republic Steel in Cleveland. The company got the federal government to send troops to break up a sit-down strike. A soldier shot my mom's foster brother in the hand and he lost 2 fingers. That was about 1938, about 14 years before I was born. Violence promoted by corporations and condoned by the government started as soon as progressives got laws protecting the working man and the lower class families from the avarice of business America and it hasn't stopped. The corporations went after blue collar jobs, and believe it, they will pull anyone down if it makes their bloody bottom line look better.

Why Pres. Obama signed this stinking piece of garbage is beyond me. Workers have lost enough and we need to protect and regain workers' rights and benefits before we all end up living "nasty brutish and short lives", which, my friends, is also going to happen in my lifetime, if we don't all wake up and smell the coffee.

[Kolesar]

13. My employer cut pension benefits drastically last time the "discount rate" was lowered

Rather than dump another billion dollars into the pension fund, the company decided to cut my retirement benefits by about $400/month.

This legislation addresses that issue.
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That computation change will let companies estimate their pension fund earnings by assuming the interest rate will be near the average of the past 25 years, rather than the past two years when interest rates have been extremely low. Since they will now be able to assume that their pension investments are earning higher profits, they will be required to contribute less money from corporate coffers to make up the difference.

[Yo_Mama]

17. Paying for the student bennies by robbing workers' pensions?

The bill Obama signed into law last Friday renews transportation programs and extends low interest rates on student loans. It was partly paid for by changing pension laws. It would raise around $10 billion over the next decade by boosting the premiums companies pay the government to insure their pension plans, and another $9 billion by changing how businesses calculate what they must contribute to their pension funds.

That computation change will let companies estimate their pension fund earnings by assuming the interest rate will be near the average of the past 25 years, rather than the past two years when interest rates have been extremely low. Since they will now be able to assume that their pension investments are earning higher profits, they will be required to contribute less money from corporate coffers to make up the difference.

The government makes money because companies will make fewer pension contributions, which are tax deductible.

Cheap and cynical, if you ask me. Interest rates are very low now, but they may well remain that low. Over the long run this is an awful lot of money going out of workers' pensions.