The Next Pension Bailout -- New momentum to dump private union retirement burdens on taxpayers
Congress is gone for August—heaven be praised—but that hasn't stopped unions from quietly mobilizing to push through a big new priority this fall: a pension bailout. Big Labor is going Code Red on the issue, in the face of a looming accounting change that would force companies to confront the Ponzi-style nature of multi-employer pension plans.
We wrote in June about this class of some 1,500 union-run retirement vehicles, in which companies across an entire industry pay into a single pension pool. Hundreds of these multi-employer pools are badly underfunded, thanks to years of labor funneling money into new pay and benefits, rather than into the funds for retirees.
The big problem with these plans is that when one company in the pool goes out of business, the other companies remain on the hook for the cost of the plan. These spiraling liabilities inspired Pennsylvania Senator and Big Labor favorite Bob Casey to introduce legislation to cordon off "orphaned" pensions—those for which an employer has stopped contributing or withdrawn from the plan—and drop them on the federal Pension Benefit Guaranty Corporation.
The PBGC is already significantly underfunded and taxpayers are its ultimate backstop. Yet the Casey bailout could dump as much as $165 billion in new liabilities on the PBGC, while multi-employer plans would get a clean bill of health. What a deal.
This cause has taken on new political urgency, and no less than Senate Majority Whip Dick Durbin has endorsed the bill. The reason for the rush is new rules that may soon be issued by the Financial Accounting Standards Board (FASB), the green-eyeshade outfit that dictates how companies keep their books. Those proposed rules would expose the multi-employer time bomb.
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Related:
I covered this issue in greater detail here:
Aug 20, 2010 at 4:07 PM
Reader Comments (6)
http://www.businessinsider.com/jon-stewart-rips-obama-for-his-non-answers-about-the-proposed-ground-zero-mosque-2010-8
VIDEO
http://tpmlivewire.talkingpointsmemo.com/2010/08/colbert-on-obama-mosque-comments-so-hes-not-a-secret-muslim-video.php
http://www.youtube.com/watch?v=XCxzL_GrKRM
Great video on the latest cover-up...
True, thanks to the wonderful market since 2001, and stock ponzi investments the funds were in like Enron and Tyco etc.. Unions were not the only ones who lost on these "investments", and I use that term extremely loosely.
“thanks to years of labor funneling money into new pay and benefits, rather than into the funds for retirees.”
Completely false, through collective bargaining, money has been added into the pension funds for years from the employee wage package in compliance with the ERISA act. Not to say they do not exist, but I know of no multi employer pensions who have an additional employer set aside.
“The big problem with these plans is that when one company in the pool goes out of business, the other companies remain on the hook for the cost of the plan.”
False, When an employer goes out of business, employees must seek another job under a participating contractor to continue having money go into the fund as part of their wage package (otherwise they gain no additional increases) and continue gaining years of service. OTHER CONTRACTORS DO NOT PICK UP THE TAB!!!!!!!! The employees are only able to draw at retirement based on years of service, how much they paid in, and the multiplier, which is based on the performance of the fund in the market, so it changes over time to reflect the market, or lack thereof…
The investing of the funds is handled by various investment groups who charge the fund (which is employee money, not the poor contractors) a yearly fee to handle the investing, all is audited and handled according to the ERISA act.
Generally when a company goes out of business, the employees find that the contractor has not paid the pension and health and welfare obligation based on the payroll deduct aspect of the agreed wage package. Not to mention the unemployment and S.S. obligations. They also have been known to stiff employees of their wages.
“The PBGC is already significantly underfunded and taxpayers are its ultimate backstop”
The PBGC seizes assets of critical funds (under 80% funded), and then recalculates a lower benefit amount for retirees based on how much money is in the seized fund, THEY NEVER MAKE WHOLE.
The glorious market of perpetuated fraud and swindles and the lack of a reckoning, is what is f@cking up pensions, just like it is your and my 401k. Yet again, lets blame the little guy and pretend it will be at par dollar for dollar like the banksters to divert attention from the real fraud.
Private pensions are not like public pensions, when people get caught stealing from private pensions they go to jail. When politicians get caught stealing, I mean borrowing, from public pensions they get re elected by those who meet the criteria below...
As James S. said, "Ideas are sugar coated, spun and wrapped in rhetoric and made into advertisements or propaganda.", and he is correct. Ideas are also like assholes, and everyone has either got one, or is willing to bury their nose in one who's aroma suits their liking. And each herd has their own olfactory preferences.
I rather liked that James...
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http://cbs3.com/consumer/pensions.401.k.2.1143641.html