Corporate pension bailouts are yet another welfare program....

[whistle]

...for the wealthy at taxpayer's expense. Sadly, employees many of whom have spent their entire working careers with a single corporation building toward these pension promises will loose a great deal if not all of the retirement benefits they had worked for. How would privatization of Social Security off-set the risks of these sorts of irresponsible actions by large corporations? I seem to recall a story that Eastern Airlines under CEO Frank Borman pulled a similar stunt six or eight years ago?

<snip>
May 12, 2005
United's Pension Debacle

On Tuesday, when it received a federal bankruptcy court's permission to terminate its pension plans, United Airlines became the biggest pension defaulter in the history of corporate America. Analysts fear that Delta may also default, as well as other ailing airlines, followed by auto parts companies and perhaps even, in five years or so, the car-makers themselves.

When the court's decision is finalized, United will unload $6.6 billion of obligations onto the Pension Benefit Guaranty Corporation, the federal agency that insures corporate pensions. Some of the 134,000 employees and retirees of United will see little change in their retirement payouts because the government insures a big chunk of promised benefits - up to $45,614 this year for someone retiring at age 65. But for others, especially pilots, who typically accumulate six-figure pensions and must retire at age 60, the cuts will be draconian.

Sadly, it's too late to offer relief to the burned United employees. But their plight should compel Congress to learn the right lessons and take the necessary steps to protect Americans' pensions.

<more>
<link> http://www.nytimes.com/2005/05/12/opinion/12thu1.html?th&emc=th

[Coexist]

1. But if we didn't take care of the rich

what would be left to trickle down onto the rest of us.
Crumbs are crumbs, sweetie!

MSNBC poll re: pension plans was 94% against allowing this. Damn activist judges...

[JHB]

2. Another, still accurate article:

http://bernie.house.gov/documents/articles/20030908190103.asp

Published on 9/8/2003 in the Business Week
The Great American Pension-Fund Robbery
by Robert Kuttner
...
But if pensions are under water, the cause is less a perfect storm than a leaky boat ravaged by pirates. For more than a decade, corporate sponsors of pension plans have been systematically looting them. The great pension raid is of a piece with the other accounting deceptions of the 1990s, and it had the same motivation -- to boost reported earnings and stock prices.
...
Among the favorite gimmicks for creative theft of pension assets:

-- Project an unrealistically high rate of return and claim that the plan is overfunded. Then reduce contributions to the plan and divert the plan's assets to fattening the bottom line. This maneuver allowed corporations to hype reported earnings by 10% to 15% during the 1990s, which in turn contributed to the same stock market bubble that supposedly justified the inflated rate of return. When the bubble burst, pension plans found themselves underfunded.

-- Convert from conventional plans to "cash-balance plans." This was invented by Bank of America in 1985 and widely imitated. Terminating a pension plan results in a large tax penalty, so consultants invented a hybrid that quacks like a 401(k) but doesn't trigger the penalty. The Internal Revenue Service went along with the fiction that a cash-balance plan, which reduces payouts, is not really a termination of the plan. The conversion creates imaginary individual accounts that pay a set rate of return. Companies then book their projected future savings as current earnings, thanks to a bizarre determination by the Financial Accounting Standards Board. On July 31, in response to a lawsuit by IBM workers, a federal judge ruled that such conversions constitute illegal age discrimination.
...
Once, pension plans were intended to induce loyalty and long service in workers. Now, big corporations and their executives seem to care about only one category of worker -- top managers, who loot the plans while protecting their own assets. Ordinary long-tenured employees are deemed liabilities.

The remedy for depleted pension funds is much tougher regulation. But the Bush Administration wants to weaken anti-discrimination rules to make it even easier for top executives to have one set of rules for employees and another for themselves. To solve the underfunding problem, the government should be forcing companies to disgorge money that was improperly diverted from plans to corporate bottom lines, thus making the plans whole. Instead, the Administration wants to allow companies to use more liberal accounting assumptions about rates of return.

(more at link above)

[whistle]

3. Robert Kuttner has hit the nail on the head...

<snip>

"But if pensions are under water, the cause is less a perfect storm than a leaky boat ravaged by pirates."

Look to the people who are running the show and the bonuses they get for the actions they take. The bankruptcy bill just passed by congress, focused on the wrong pirates.