United = biggest corporate-pension default ever

[Freak]

A federal bankruptcy judge approved United AirlinesÂ’ plan to terminate its employeesÂ’ pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.
Just a sign of what is to come.
I understand the reason they can get out of their pension obligation is because they are bankrupt. Basically what the court is acknowledging is that the pension is making them uncompetitive. If the company can't become competitive, it will end up being dissolved and the pension would not get paid then either.
For the people in the pension plan it means that they will receive less of their pension, but still some money from the Pension Benefit Guaranty Corporation (PBGC.gov). I don't exactly know what the funding mechanism is, but I am sure the taxpayers pay for it. Although this will be the largest pension default so far, the really scary pension default that may be on the horizon is GM. They have 3 times as many retirees as they have employees.
Lately I am beginning to wonder if GM is not running itself into the bankruptcy to get out of the pension problems it is facing.
How do you suppose we'll all end up paying for it? i see 3 possible ways...
1. They don't insure the pensions & the retirees get nothing.
2. raise taxes to insure (pay) those pensions.
3. print up the money thus further devaluing the dollar?
or a combination of the 3???

[HOSS]

move to China

[SmokinLowriderSS]

Welcome to the end result of labor unions. Just ask a Pan-Am employee for details. Oh, yea, Pan-Am was closed by it's union. Btw, I happen to be a union member, IAMAW, for 1 purpose. To have voting (and bitching) rights at contract time and afterwards.

[Super D]

Pensions are dinosaurs on their last legs, a tail waiting to sting its own self. Self-directed (401k, etc) is the way to go, including self-directed Social Security, IMHO. Let me determine my own fate...

[HighRoller]

Yup, the Unions are finally getting theirs. They've all but strangled the airline industry and now GM and Ford are starting to wheeze under the load of the bloated union compensation packages they've had jammed up their asses. That's what you get for paying some loser $40/hr to operate an air wrench or push a button on an assembly line and then have to offer him healthcare and a job til he dies. Looks like the UAW is going to "protect" their members right out of a job! DUMBASSES!

[Seadog]

A few years ago, 40% of companies had pension plans and today it is 20%. Pension plans were a part of when companies never changed and people expected life time security. With the globalization of companies and the constant changes, unions and pensions are bad for business. Too many unions are bloated and/or crooked. Businesses are expected to adapt, but the unions refuse to.
Our government is in for a financial shock of an order of the Savings and Loan debacle that hurt so many people. It is nothing compared to what can happen if Social Security reform is not initiated. We are due for a weatehr change in how we view our jobs. We are going to have to work longer and with benefits that will travel with us from company to company. If nothing is done, our health care will collapse under the weight of more and more people relying on indigent care because their companies cannot afford policies. I hope our politicians get their act together and tell the lawyers and outrageous political groups to take a hike. Even if they don't, I have confidence that we will survive the future, just not as luxurious as many of us expect. I also think that the west coast is going to take the biggest fall due to how out of sync it is with the rest of the nation. The Grapes of Wrath in reverse.

[Freak]

Agreed, a change in lifestyle is coming.
If only the clock could be turned back 12-15 years when Mr. Perot warned of the consequences of NAFTA and the loss of US manufacturing jobs with the multiple deleterious ripple effects. US manufacturing wages that would now be in US savings accounts have been exported indirectly to foreign governments who have exchanged their domestic currencies for the US currency earned by their low wage manufacturers.
With the export of manufacturing jobs, the US has been forced into the low interest rate environment end game of financial and home speculation. The game goes on only as long as the borrowing continues.
I reckon it's only a matter of time till some portion of the people (the sleeple?) wake up to the idea that if they are investing in 401-K plans with a planned withdrawal date anything much past the end of this week, they are taking on a huge - and undisclosed - systemic risk. Why? Because if the best pension brains in the world can't keep a fund solvent, why should the part time investor relying on a commission-based system expect to beat the rest of the pack? Yeah, I know, the mantra is "Buy and hold"." But the odds seem to lengthen daily that you'll have to hold till you've been dead another lifetime before the markets will come back after what i see on the horizon.

[Super D]

of course there is always risk in investing, hence diversifying your funds. Don't put all your eggs in one basket, and my funds will ALWAYS outperform social security.

[Seadog]

There are a lot of areas that need attention. Investment funds are one that will have to be refined as we go along. You always have to remember that anytime a person finds a way to earn money, somebody will try and find a way to steal it.

[Freak]

Ok riddle me this. A reread through all of the Fed comments from Thursday and I want to know "What is non-financial debt?" My point being that debt is always financial, so how can you have non-financial debt?
We need a Dictionary for a New Economics that explains them, it will go something like this:
non-financial debt is financial debt
Consumer Credit is consumer debt
and there is an Easter Bunny
Dow and other indices have long ago grown tired of being tied to anything that even remotely could be called reality.
What Greenspan says and the plunge protection team does to keep the market afloat is truly mind warping.
I read where one guy said the market is set to go to 35,000. I'm starting to believe him. All we have to do is get over the 10700 mark we started at the beginning on this year.

[HighRoller]

I don't care what anybody says about the stock market, it's still the best place to put your money. It has NEVER declined in any 10 year stretch, and there are mutual funds out there with a 30 year track record of 10%+ annual return. Individual stocks other than Blue Chips are suicide, IMO. Diversify and you'll be okay. Oh, and stay away from putting your 401K in company stock. Can you say ENRON? :messedup:

[Floored]

I am not pro union but how many cars do they have to sell to just pay the CEO for 1 year,salary, options,and bennies,golden parachute? Then follow the white collars down the line and see why cars cost so much and why they are building out of the U.S. Cheap labor doesn't mean cheaper product for us, just more profit for upper management salaries.

[Jeanyus]

I would rather see a corperations profits, go to their management. than to the , more than likely corrupt, union management. Unions are like terminal cancer, it has a built in cure. Just take a look at the state of California.

[Flying Tiger]

Although this will be the largest pension default so far, the really scary pension default that may be on the horizon is GM. They have 3 times as many retirees as they have employees.
One of the most solid, and solvent pention plans in the US is GM's.
Don't be news media frenzied drivin.
Ford has a fully funded and excellent pension plan too.
Both plans have plenty of cash to handle future developments.
I suggest you run a search and check out GM's steller plan.
International Brotherhood of Elect Workers has a very solvent plan too.
My unit has 7200 retired people drawing off of a proprietary to just us 6.7 billion dollar fund.
Don't let the doom and gloom media grind ya down.
It aint all that bad. Research beyond the left wing media.
- Ross AKA TPC

[1978 Rogers]

Alaska Airlines fired all its union ground help (bagage handlers, etc.) this past winter. Reportedly it saved them 10 Mil a year.

[Dave C]

something to note:
1) pensions are insured (PBGC) and the insurance is paid for by the company.
2) it is illegal to prefund too much of the pension. Which is retarded because if the company has a good year and has money they can't sock away some of it for a rainy day. Congress needs to change this rule.
Most of the underfunded pensions today are due goverment rules having to do with the interest rate changes (its complicated) and devaluation of assets within the plan and the inability to prefund for a "rainy day."
Much of United's problems with their pension plan has a lot to do with the archaic pension rules. Some of it has to do with their lack of competiveness.
Congress is addressing some of the regulatory problems but knowing them they will make it worse.
I suspect (my opinion) that most union pension plans will remain and be fully funded.
but what the hell do I know, I'm only an expert in this field.

[dc96819]

(terminating pension plans ) i hope other companies dont jump on that boat.

[Freak]

You really think PBGC can handle the load?
I watched a united worker of 30yrs on tv said his pension will now be 200 a month. Grandstanding or truth?

[northern baja]

This one needs to go to the top! This country needs to define whether it's run by thieves and bandits or by the people! If this is a pirate state let us all get on the same page. Let's default on the retired presidients, senators, congressmen, and judges pensions! Think of the savings!
Many judges don't conduct themselves as if they are "for the people by the people", so maybe the people need to give them the boot!
If the supreme court can't do this right, then the rules need to change on their life time assignment looking down at us!
Stealing from the retired. Isn't that like stealin' candy from a kid, hitting a girl, hurting small animals for entertainment?
Anybody(corp executives, judges, etc.) that resorts to or allows this kind of crime to happen, should be stripped of everything and sent to the poor house with all the people they sent there.
Sell your boats now. We'll all need to be liquid to support our parents after their retirement is stolen!
BTW. Before you donate to any more of their charities, you better consider your own future. Those $s may be better saved for your own retirement in 30 years.
Gross!