Decision clears way for biggest corporate-pension default ever

[SunDevil]

http://www.msnbc.msn.com/id/7804770/

United gets approval to shift pension plans
Decision clears way for biggest corporate-pension default ever
The Associated Press
Updated: 8:43 p.m. ET May 10, 2005

CHICAGO - A federal bankruptcy judge approved United Airlines’ plan to terminate its employees’ pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.

The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United’s four defined-benefit plans to the government’s pension agency.

That will save cash-strapped United an estimated $645 million a year, part of the $2 billion in annual savings it says it needs to line up enough financing to emerge from Chapter 11 bankruptcy as soon as this fall.

But the cost will be painful to its employees, who stand to lose thousands of dollars annually off their pensions when they are assumed by the Pension Benefit Guaranty Corp.

The PBGC, the government’s pension insurer, initially opposed United’s plan. But it agreed to drop that resistance last month in exchange for up to $1.5 billion in notes and convertible stock in a reorganized UAL Corp., United’s holding company.

United’s pensions are underfunded by an estimated $9.8 billion, of which the PBGC would guarantee only about $5 billion. The previous largest U.S. pension default was Bethlehem Steel’s $3.6 billion in underfunding in 2002.

Judge Eugene Wedoff said the settlement, while disputed, does not violate any law or United’s collective bargaining agreement and he noted that employees at companies such as United could end up with fewer or even no benefits if no arrangement is made and the company goes broke.

“The least bad of the available choices here has got to be the one that keeps an airline functioning, that keeps employees being paid,” Wedoff said.

United Chief Financial Officer Jake Brace said the ruling is crucial for United to come out of bankruptcy.

“It’s not a good outcome. It’s unfortunately a necessary outcome,” he said. “This is not in any way a joyous day. It is an important step in our restructuring and in making our airline successful and viable for the long term.”

United’s controversial move risks provoking action by employees who already have agreed to sharp cuts. Unions have raised the possibility of striking if United dumps the pensions.

The Association of Flight Attendants, which threatened unspecified labor actions if the pensions were struck, will meet to decide its next step, said spokeswoman Dianne Tamuk.

“We feel sold out,” by the action, she said. Tamuk, 49, said her pension will be reduced from $1,700 a month to $800 a month by Wedoff’s ruling.

United’s effort to dump its pensions has been watched closely by the rest of the airline industry, where record fuel costs, the lowest fares since the early 1990s and stiff competition have caused network carriers to lose billions of dollars. Tuesday’s ruling, following a step taken successfully by US Airways Group Inc. in February, clears the way for similar actions elsewhere.

United’s biggest competitors would be under the most pressure to follow suit. American Airlines, the largest U.S. carrier and a unit of AMR Corp., has said it will keep its pension plans but is concerned about No. 2 United gaining a financial advantage with the elimination of its pensions.

On Wednesday, flight attendants for American will gather in Washington to lobby for federal pension reform that would allow carriers to extend the amount of time they have to replenish underfunded plans and provide relief to airlines that seek, through collective bargaining, to preserve rather than terminate their pension obligations.

No. 3 Delta Air Lines Inc., which has said it is in danger of being forced to file for Chapter 11 bankruptcy, faces $3.1 billion in pension payments over the next three years.

An overflow crowd of current and former United workers showed up at bankruptcy court Tuesday, with more than 100 packing the courtroom and dozens more listening to piped-in proceedings in a separate courtroom.

Unions representing United’s flight attendants, mechanics and ramp workers have expressed their ire at both the airline and the government’s pension insurer, PBGC, for agreeing to drop its opposition to United’s plan last month.

Attorney Jeffrey Cohen said the PBGC, which might have been unable to halt United’s plan in any case, made the agreement as “a matter of last resort.” Disputing the flight attendants’ contention that the deal violated its mission, he said the agency concluded that cutting a deal was in the best interest of not only those with pensions at United and other companies but also for taxpayers who fund the pension insurer.

In addition, he said, “We think it helps clear a path to the exit door” for United to leave bankruptcy.

Lawyers for United’s unions spoke ardently earlier Tuesday against the proposal.

Robert Clayman, an attorney for the Association of Flight Attendants, drew loud applause and cheers from employee spectators in both the courtroom and auxiliary court with an emotional appeal to preserve the pensions and workers’ secure retirements.

“Without equity there is no justice,” he said.

Jack Carriglio, an attorney for retired United pilots, said the airline should be ashamed of the agreement and warned of the consequences among angry employees.

“A strike is a real prospect if that agreement is approved,” he said. “Also, this will have a grave impact on United employees’ morale.”
© 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

© 2005 MSNBC.com

URL: http://www.msnbc.msn.com/id/7804770/

[Flasch186]

my jaw just hit the floor. Im shocked.

[albionmoonlight]

my jaw just hit the floor. Im shocked.
/sarcastic voice/Don't worry. Congress just amended the Bankruptcy Laws to encourage personal responsibility. I'm sure that they'll step in to remedy this /sarcastic voice/

[chinaski]

holy shit thats horrible. my girlfriends aunt has worked for United for 35 years! Her ENTIRE working life. Why is it things like this are allowed to happen? Why cant it be protected? Money goes in.. employer matches.. money stays put... collects interest.. we all retire happy... ??????

[Flasch186]

right personal bankruptcy make harder, corporate bankruptcy make easier and fuck the employess while youre at it.

I propose that Credit card companies cannot hand out CC's on college campuses like they were coupons. Only prepaid debit cards to begin with but Ill bet the legislature wouldnt go for that.

[Buccaneer]

“The least bad of the available choices here has got to be the one that keeps an airline functioning, that keeps employees being paid,” Wedoff said.
That, obviously, is a bad thing.

[Buccaneer]

holy shit thats horrible. my girlfriends aunt has worked for United for 35 years! Her ENTIRE working life. Why is it things like this are allowed to happen? Why cant it be protected? Money goes in.. employer matches.. money stays put... collects interest.. we all retire happy... ??????
Tell that to the tens of thousands of workers in 1950s and 1960s that lost their pensions because their union leadership plundered, stole and racketeered the accounts.

While this is sad, I trust the judge knows more about the choices than we do. When more money goes out than what comes in, bad things always result.

[Galaxy]

right personal bankruptcy make harder, corporate bankruptcy make easier and fuck the employess while youre at it.

I propose that Credit card companies cannot hand out CC's on college campuses like they were coupons. Only prepaid debit cards to begin with but Ill bet the legislature wouldnt go for that.

Personal bankruptcy's new laws are not in effect yet. While it still has some problems for the medical problems and the people who lose their jobs, I think its a wonderful thing outside of those exemptions. I think parents need to do a better job teaching their children about credit cards and finances, instead of handing them whatever they want. Are credit card companies aggressive, you bet. But 18-year-old kids are responsible enough to vote, join the war, and should have have enough mental capacity to make adult decisions.

[albionmoonlight]

That, obviously, is a bad thing.
The problem is that anyone with half a brain and knowledge of accounting knew that this was coming. There is no reason (other than decades of mismanagment and greed by United) that we had to be faced with this Hobson's choice.

For decades, companies have not socked enough money away to cover their pension obligations. They budgeted based on unrealistic market growth assumptions (which they helped write into law with their lobbyists). They put themselves into a situation where the only choice was bankruptcy or elimination of the pension system. It would be like one of us saving for retirement based on the assumption that our nest egg will grow 20% a year forever. You'll find yourself short in the end.

Of course, however, it was not your retirement you were saving for. It was the retirement of all your employees. Employees who collectively bargained for wages based on a promise that these benefits would be there. If ERISA is too onerous, then lobby to get rid of ERISA--or move your plants overseas and force Congress to take action. Don't gut the system just enough to make it a sham and then lie to all of your employees.

Had United been honest about what it would take to keep the pension plan afloat, there would be no choice here. The pension plan would be funded.

If I blow all of my money on coke and hookers and then come to the government for bread so I don't starve, they will probably give me the bread. But people have a right to call my life sinful and me a bad bad man.

If United needs to break its promise to all of its former employees in order to stay in business, the government will let it do that. But I have a right to call United sinful and its executives bad bad men.

(In case anyone was wondering how and why I know and care about these issues--I did ERISA work for a year before my current job).

[chinaski]

Tell that to the tens of thousands of workers in 1950s and 1960s that lost their pensions because their union leadership plundered, stole and racketeered the accounts.

While this is sad, I trust the judge knows more about the choices than we do. When more money goes out than what comes in, bad things always result.
i will tell them and if they still dont care; ill kick them in the nuts.

[ISiddiqui]

albion's got it correct. In the end, at the LEAST, these people got some of their pensions safeguarded. The alternative is worse. It sounds like the judge is horrible for letting this happen, but realistically, if he didn't, the employees may have lost their jobs and then gotten a pittance of what they are guarenteed now by PBGC.

[Crapshoot]

The problem is that anyone with half a brain and knowledge of accounting knew that this was coming. There is no reason (other than decades of mismanagment and greed by United) that we had to be faced with this Hobson's choice.

For decades, companies have not socked enough money away to cover their pension obligations. They budgeted based on unrealistic market growth assumptions (which they helped write into law with their lobbyists). They put themselves into a situation where the only choice was bankruptcy or elimination of the pension system. It would be like one of us saving for retirement based on the assumption that our nest egg will grow 20% a year forever. You'll find yourself short in the end.

Of course, however, it was not your retirement you were saving for. It was the retirement of all your employees. Employees who collectively bargained for wages based on a promise that these benefits would be there. If ERISA is too onerous, then lobby to get rid of ERISA--or move your plants overseas and force Congress to take action. Don't gut the system just enough to make it a sham and then lie to all of your employees.

Had United been honest about what it would take to keep the pension plan afloat, there would be no choice here. The pension plan would be funded.

If I blow all of my money on coke and hookers and then come to the government for bread so I don't starve, they will probably give me the bread. But people have a right to call my life sinful and me a bad bad man.

If United needs to break its promise to all of its former employees in order to stay in business, the government will let it do that. But I have a right to call United sinful and its executives bad bad men.

(In case anyone was wondering how and why I know and care about these issues--I did ERISA work for a year before my current job).

I was going to ask that. And watch the shit hit the fan when GM defaults on its pensions obligations, which are the largest in the nation, about 5 years from now. Off Balance sheet accounting is one of the neatest tricks around.

[Greyroofoo]

Personal bankruptcy's new laws are not in effect yet. While it still has some problems for the medical problems and the people who lose their jobs, I think its a wonderful thing outside of those exemptions. I think parents need to do a better job teaching their children about credit cards and finances, instead of handing them whatever they want. Are credit card companies aggressive, you bet. But 18-year-old kids are responsible enough to vote, join the war, and should have have enough mental capacity to make adult decisions.

of course people with medical problems and people who lost their jobs are the MAJORITY of whom file for bankruptcy.

[Farrah Whitworth-Rahn]

Wow that AP article is leaving a lot out. A lot.


From the WSJ (link here (http://online.wsj.com/article/0,,SB111575239031129484,00.html?mod=home_whats_news_us) - subscription required)


Judge Clears Way for Record
Pension Default by UAL

Airline Is Seeking to Transfer
Obligations to Government,
Adding to Agency's Burden

By SUSAN CAREY and MICHAEL SCHROEDER
Staff Reporters of THE WALL STREET JOURNAL
May 11, 2005

A bankruptcy judge approved a bid by United Airlines parent UAL Corp. to transfer four underfunded employee pension plans to the federal government, paving the way for the largest pension default in U.S. history.

The plans, which have a shortfall of $9.8 billion, cover more than 120,000 United workers and retirees. United wants to transfer them to the federal Pension Benefit Guaranty Corp., or PBGC, which would add to the already heavy strain on the agency from a spate of pension defaults in recent years. Since accounting for United's obligations last year, in anticipation it would assume them, the agency has taken on obligations exceeding its assets by $23.3 billion. The PBGC was created in 1974 to guarantee corporate pension plans and pay benefits to workers whose employee-sponsored plans fail.


The agency and UAL joined together in the settlement agreement approved by U.S. Bankruptcy Court Judge Eugene Wedoff in a Chicago court. The judge said the agreement didn't amount to a breach of the carrier's contract with its union. But with some workers facing the prospect of reduced benefits, one UAL union said it would appeal the decision, while others are threatening to strike if their entire contracts are annulled by the court in a hearing scheduled to begin to today. Labor disruptions would severely hurt UAL as it seeks to emerge from Chapter 11 bankruptcy court protection later this year after more than two years.

The court's decision could have wide repercussions in the airline industry, which is struggling with high fuel costs, intense fare competition and overcapacity. Sidestepping its pension liabilities will help UAL attract additional funding, while giving it a huge cost advantage over many of its rivals, which are saddled with underfunded defined-benefit retirement plans of their own. That will put further pressure on those airlines to slash their costs or in some cases seek bankruptcy protection in hopes of terminating their own pension plans.

Yesterday, Delta Air Lines (http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=company-research&ambiguous-purchase-template=company-research-symbol-ambiguity&profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-format-action=include&profile-read-action=skip-read&profile-write-action=skip-write&transform-value-quote-search=dal&transform-name-quote-search=nvp-set-p-sym&nvp-companion-p-type=djn&q-match=stem&section=quote&profile-end=Portfolio&p-headline=wsjie) repeated a warning that it faces a substantial loss for 2005 and could be forced to seek bankruptcy-court protection without additional cash or renegotiated debt agreements. (See related article (http://online.wsj.com/article/0,,SB111573332957929241,00.html?mod=article-outset-box).) Chief Executive Gerald Grinstein has said that United would gain a competitive advantage on rivals if it gets out of its pension obligations, boosting pressure on rivals to follow suit.

The United move likely will provide impetus for pension-insurance overhaul legislation that will be introduced in Congress in the next few months. The bills are expected to include many provisions sought by the White House, including raising company premiums to put the PBGC on firmer financial footing, imposing a seven-year deadline on companies to fully fund their pension plans and imposing a new method for more precisely measuring assets and liabilities.

Delta and Northwest Airlines (http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=company-research&ambiguous-purchase-template=company-research-symbol-ambiguity&profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-format-action=include&profile-read-action=skip-read&profile-write-action=skip-write&transform-value-quote-search=nwac&transform-name-quote-search=nvp-set-p-sym&nvp-companion-p-type=djn&q-match=stem&section=quote&profile-end=Portfolio&p-headline=wsjie) are backing a bill, introduced recently in Congress, that would allow them to stretch out payments on their pension shortfalls for 25 years -- if they freeze the plans in question and ensure that the deficit would not grow any larger. It is far from certain the bill will become law, and it already has run into resistance from lawmakers who are reluctant to give airlines a special break.

Lawmakers fear that other companies in distressed industries, like the troubled auto-parts makers, could seek to shed their pension plans while under bankruptcy-court protection. Some companies, like US Airways Group (http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=company-research&ambiguous-purchase-template=company-research-symbol-ambiguity&profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-format-action=include&profile-read-action=skip-read&profile-write-action=skip-write&transform-value-quote-search=uair&transform-name-quote-search=nvp-set-p-sym&nvp-companion-p-type=djn&q-match=stem&section=quote&profile-end=Portfolio&p-headline=wsjie) Inc., have done so already.

The court's approval will help UAL sidestep more than $3 billion in pension contributions over the next five years, while leading to retirement benefit cuts for many of its workers and retirees. The agreement requires the PBGC to make a final determination soon that the plans meet the requirements to be taken over. It also requires UAL to give the pension insurer up to $1.5 billion in notes and convertible stock in the reorganized carrier to settle its claims. The size of the PBGC's potential stake in UAL is not known because the airline hasn't yet finalized its plan of reorganization, but the PBGC has said that the settlement agreement leaves it in a better financial position than other creditors.

Judge Wedoff said the settlement would save UAL from the costs and distraction of litigation and would give the airline more "certainty about its future."

In a statement, United said the settlement agreement "is a crucial step forward for the future of United, as it strengthens the financial platform this company needs to attract exit financing and compete effectively." At the same time, the company said, "We clearly recognize that the court's decision is difficult for our retirees and our employees, who have been doing extraordinary work throughout this restructuring process."

Jeffrey Cohen, a lawyer for the PBGC, said in court that his agency "has concluded the agreement is in the best interests of all the PBGC constituents," adding that because the plan termination will hurt many United employees, "we don't do it lightly." The agreement "clears a path to the [bankruptcy] exit door" for United, he said.

Judge Wedoff said that because the PBGC initiated the pension termination, the union's labor contracts with UAL wouldn't be considered to be breached. Under retirement law, if the PBGC initiates termination, that takes precedence over United's contractual obligations, the judge said.

Richard Turk, a spokesman for the Aircraft Mechanics Fraternal Association local in San Francisco, which represents many United mechanics, said his members are "beyond angry. We're just fed up."

He said the union still has contractual rights to the retirement benefits in its current contract, but UAL hopes today to persuade Judge Wedoff to void that contract so the airline can impose lower pay and benefit terms on the workers.

"Even if the money shifts to the PBGC, nobody tomorrow is going to be paid less," said Mr. Turk. "They still have to deal with our contract."

Joe Tiberi, a spokesman for the International Association of Machinists union, said the group plans to appeal yesterday's pension ruling and is rescheduling negotiations with United over other contract issues that will be coming into court today as part of the hearing to void the existing contract. The machinist union members at United, primarily ramp workers and customer-service agents, completed voting earlier this week on a strike-authorization ballot, results of which will be announced today.

The PBGC, according to terms of the settlement, would guarantee payments to plan participants totaling $6.6 billion, meaning workers and retirees would be shorted by $3.2 billion in the form of benefit reductions. The agency's maximum benefit paid to any retiree this year is $45,614 for a 65-year-old person, which means many United workers -- particularly the pilots, who must by law retire at age 60 -- would receive less than they expected from the airline.

The likely jettisoning of the costly defined-benefit pension plans is central to UAL's business strategy as it works to attract $2 billion to $2.5 billion in debt financing to step out of court protection this fall. Prospective lenders have told the airline in no uncertain terms that they aren't interested in raising money if the airline is going to pay it all out in pension contributions in the next few years.

UAL has been suggesting since last summer that it couldn't come out of Chapter 11 with the big pension liabilities. In a second round of employee concessions, its pilots agreed to let their pension plan be shifted to the government in exchange for $550 million in convertible notes in the reorganized UAL. But retired pilots, who stand to take a huge hit between what they were getting from the airline and what they will receive in payments from the PBGC, continued to object yesterday in court.

The courtroom in Chicago was so crowded with unhappy United employees and retirees that Judge Wedoff sent the overflow to a second courtroom where people could listen to the proceedings. When Rob Clayman, the attendant union attorney, broke into tears in a plea to save the retirements of the cabin attendants, both courtrooms erupted in applause and cheers.

The Association of Flight Attendants, which has grown increasingly militant in recent months, also agreed to the second round of pay cuts, but continued to press for retention of its pension plan and threatened to strike if the plan was terminated, saying that would violate its contract.

[Galaxy]

of course people with medical problems and people who lost their jobs are the MAJORITY of whom file for bankruptcy.

Never said I approved of the medical/lost jobs in the new laws. Just those who don't file for those reasons, I support the laws. Like I said, it's not a perfect law.

[finkenst]

Personal bankruptcy's new laws are not in effect yet. While it still has some problems for the medical problems and the people who lose their jobs, I think its a wonderful thing outside of those exemptions. I think parents need to do a better job teaching their children about credit cards and finances, instead of handing them whatever they want. Are credit card companies aggressive, you bet. But 18-year-old kids are responsible enough to vote, join the war, and should have have enough mental capacity to make adult decisions.
yet, they can't go buy or drink a beer or other alcoholic beverages.

[JPhillips]

Galaxy: Then my credit card interest rate should be lowered because the companies have less risk. Credit cards are a great business for the banks. They get to loan people money without having to worry about federal loan regulations. While I agree that people are too often irresponsible with their finances, the credit card companies behave with reckless abandon knowing full well that they can charge what ever rates and establish whatever penalties they like to recoup their losses.

[Galaxy]

Galaxy: Then my credit card interest rate should be lowered because the companies have less risk. Credit cards are a great business for the banks. They get to loan people money without having to worry about federal loan regulations. While I agree that people are too often irresponsible with their finances, the credit card companies behave with reckless abandon knowing full well that they can charge what ever rates and establish whatever penalties they like to recoup their losses.

I agree. They are aggressive, but we can't blame cc companies 100%. We need to take personal responsibility for teaching kids how they work, ect.

[Galaxy]

yet, they can't go buy or drink a beer or other alcoholic beverages.

I wouldn't have a problem with a 18-year-old limit for alcoholic.

[JPhillips]

My problem isn't so much with the ease of getting a card as it is with the minutiea of the rules regarding payments and the fact that the can charge any interest rate they choose. While we should teach kids how to manage their money(I can think of a few HS classes that this could replace) we also should regulate the credit card industry to keep it more in line with the regular banking rules. Credit card companies should not have sole discretion of interest rates and penalties, especially when they are imposing penalties based on actions not related to their cards.

And I will be angry for years that the credit card companies are getting reduced risk and aren't forced to lower interest rates to compensate.

[Galaxy]

My problem isn't so much with the ease of getting a card as it is with the minutiea of the rules regarding payments and the fact that the can charge any interest rate they choose. While we should teach kids how to manage their money(I can think of a few HS classes that this could replace) we also should regulate the credit card industry to keep it more in line with the regular banking rules. Credit card companies should not have sole discretion of interest rates and penalties, especially when they are imposing penalties based on actions not related to their cards.

And I will be angry for years that the credit card companies are getting reduced risk and aren't forced to lower interest rates to compensate.


Ok...I understand you now, and I agree. I though you meant about the first part you were talking about, the ease of getting the card.

[JeffNights]

/sarcastic voice/Don't worry. Congress just amended the Bankruptcy Laws to encourage personal responsibility. I'm sure that they'll step in to remedy this /sarcastic voice/


Can I nominate this for post of the Year?

[st.cronin]

Anybody who's been paying attention know's the airline industry is fucked. Something dramatic will happen in the next 20 years. My guess is the industry will be at least partly nationalized eventually.

[Galaxy]

Anybody who's been paying attention know's the airline industry is fucked. Something dramatic will happen in the next 20 years. My guess is the industry will be at least partly nationalized eventually.

Won't be nationalized. Fares will rise. Low fare carriers will just take over. The low fare carriers are doing well (not pulling in tons of money, but they are profitable), just the Big "hub-and-spoke" carriers are making terrible management decisions, and waited too long to react to the low-fares. Also, I think we got too many carriers.

[Northwood_DK]

And another big airline heads for bankruptcy

http://www.allheadlinenews.com/articles/2231485876
Delta Airlines May File Bankruptcy
May 10, 2005 12:35 p.m. EST
ATLANTA (AHN) - America's third largest airline announced Tuesday it will record substantial losses for the final nine months of the year. The company says if cash levels fall too low or lenders demand immediate payments, they will need to file bankruptcy.

[albionmoonlight]

Random thoughts:

1.) They really should teach $$ management in high school. What a great idea. Maybe instead of the Fairie Queen.

2.) The large carriers are fucked. Not only are they tied into the hub and spoke system, they are also in the very unfortunate position of having most of their tickets sold through third parties who charge a premium for the privildge. Whenever you use a travel agent (including online travel agents like Expedia or Travelocity) to book, the airlines are charged a fee by whichever of the third party Computer Reservation Systems (CRSs) actually books the flight. Airlines are not charged these fees if you go through their website or phone sytem. However, these CRSs provide "incentives" to travel agents to use them. So you have a system where the company paying for the CRSs (the large carriers) are not controlling its consumption (and, in fact, the consumption is controlled by people who get paid to use it). The history of how we got to this place is long and complicated and kind of boring. It's not really anyone's fault, but here we are.

Anyway, the point is that the low-budget carriers do not go through the CRSs, which saves them a ton of cash in the long run.

FYI--the year I did ERISA law, I also did transportation law. Had I also dabbled in Bankruptcy, this would have been the perfect thread for me.

3.) I'm glad that Congress is moving on Pension Reform. 25 years too late, but it's better than nothing. Right now, you and I are holding the bag as taxpayers.

4.) Ironically, pensions were seen as better deals for employees than 401(k) plans, which is why the big unions were able to negotiate them for their members. Now that a lot of large employers are going bankrupt, those pension plans are worth less than the 401(k) plans that us non-union slobs tend to have. (The money in a 401(k) is actually there. Even if your company goes bankrupt, your 401(k) is safe).

5.) I, too, think that the drinking age should be 18. Actually, I think that states should be able to decide it without being pressured by federal highway money. And then I think that states should decide to make it 18.

[jeff061]

Heard on the radio this morning that the CEO of United awarded him self a $1.1 million bonus last year.

Nice.

[Northwood_DK]

Heard on the radio this morning that the CEO of United awarded him self a $1.1 million bonus last year.

Nice.
http://news.airwise.com/story/view/1111053350.html

[Kevin]

When will companies learn never to allow a defined benefit plan in their workplace. Time after time we see defined benefit plans buy all kinds of extra benefit levels when the markets are doing well only to cause a huge funding deficit when there is a downturn.

Defined contribution plans are the only way to go as the company fulfills all its funding obligations up front and can get on with running its business without wasting resources on complex pension administration.

[albionmoonlight]

Another factoid:

Pension plans for churches have MUCH less federal oversight than other pension plans. Congress tends not to like to overregulate churches and figured that they were less of a danger to intentionally steal money from the plans.

The result is that some of the largest pension plans in the country are owned by churches, and, accordingly, have no real oversight. A lot of insiders beleive that it is a matter of when (not if) one of the mega church pensions goes into a default of some sort (we are talking big national churches--Espiscopal, Methodist, Lutheran, etc.). I, of course, have no idea if any of them are in bad situations, but all it takes is one money manager who did not have his eye on the ball for one of these plans to have gotten out of control. Even a miscalculation of 1-2% can make a difference when you are talking about billions of dollars over the time frame of decades. One of the things that oversight does is make it easier to catch problems before they become too big to handle.

Personally, I wonder whether this will come to light when/if the Episcopal church splits over the gay thing. When/if it does split, the two sides will have to fight over the assets and liabilities of the original church. That may be the first time in decades that someone REALLY looks over the books, and I wonder what they will find. Hopefully nothing, but you never really know.

[Flasch186]

I agree. They are aggressive, but we can't blame cc companies 100%. We need to take personal responsibility for teaching kids how they work, ect.

It would've been easy to get that law perfected. To not have medical emergency or job loss as an exception or some sort of leniency is incredibly special interest oriented. There is no moral code that a lawmaker has to try to tow, it was simply...we need to cut those people, in those situations, some slack....and they didnt.

And I still stand by the fact that CC companies should NOT be allowed to stand at colleges all acrossed our country, where the kids are usually hungry for some money but have little or NO credit, and give them spiffy new CC's. It is incredibly egotistical for them to play the game that way on that end but on the home stretch than lobby congress to hammer everyone later as if they didnt have some part in the cause of all of this.

[Flasch186]

Ok...I understand you now, and I agree. I though you meant about the first part you were talking about, the ease of getting the card.

I am, if credit scores are so important THAN they shouldn't ignore them, or the fact that there is no credit when handing them out like candy. They should walk the talk.

[HomerJSimpson]

Another factoid:

Pension plans for churches have MUCH less federal oversight than other pension plans. Congress tends not to like to overregulate churches and figured that they were less of a danger to intentionally steal money from the plans.

The result is that some of the largest pension plans in the country are owned by churches, and, accordingly, have no real oversight. A lot of insiders beleive that it is a matter of when (not if) one of the mega church pensions goes into a default of some sort (we are talking big national churches--Espiscopal, Methodist, Lutheran, etc.). I, of course, have no idea if any of them are in bad situations, but all it takes is one money manager who did not have his eye on the ball for one of these plans to have gotten out of control. Even a miscalculation of 1-2% can make a difference when you are talking about billions of dollars over the time frame of decades. One of the things that oversight does is make it easier to catch problems before they become too big to handle.

Personally, I wonder whether this will come to light when/if the Episcopal church splits over the gay thing. When/if it does split, the two sides will have to fight over the assets and liabilities of the original church. That may be the first time in decades that someone REALLY looks over the books, and I wonder what they will find. Hopefully nothing, but you never really know.


I think a "split" might cause major problems for these systems, but other than that I don't think that any major denomination will have to default on these plans. Unlike major corporations that steal from these funds all the time to keep their heads above water, most denominations do not have as many major liabilities and are not as likely to "rob Peter to pay Paul." That's not to say a major fraud can't/won't happen. It is just not as likely.

[albionmoonlight]

Good to see the government at least recognizing that this is a problem.

http://www.msnbc.msn.com/id/8130676/