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In My Opinion: For Middle Class, Retirement Pillars Are Tumbling
The attempt by United Airlines to dump its pension obligations isn't the first-but it's the largest corporate pension default so far, amounting to $9.8 billion in under-funded obligations, and affecting more than 120,000 workers who stand to lose at least one-third of their benefits.
In fighting United's bankruptcy ploy to hand its pension obligation to the government-backed Pension Benefit Guaranty Corp. (PBGC), AFA-CWA flight attendants are fighting on behalf of millions of other workers, who are counting on contractual pensions, as well as American taxpayers who will foot the bill for bailing out the PBGC when it collapses.
If the United pension termination stands-CWA is appealing the backroom deal between United and the PBGC in federal court and backing a bill to postpone the termination-other corporations will get in line to hand their obligations to the public too.
The ripple effect would include weaker airline competitors, such as Delta, Northwest and Continental, and likely move on to the big automakers and others, business writers are speculating.
Meanwhile, the PBGC, which went from a surplus of $9.7 billion in 1999 to a current deficit of $23.3 billion last year from assuming corporate pension liabilities, will require "a federal bailout that could rival the S&L catastrophe of the early 1990s," according to Fortune magazine.
A potentially huge crisis looms. Of all the existing defined benefit pension plans, 75 percent are under-funded - lacking the assets to pay out their benefit obligations. The reason, writes UCLA professor Katherine V.W. Stone, commenting on United's plight in the Washington Post: "In the stock market boom years of the 1980s and 1990s, the funds became so flush that United, like many large corporations with surpluses in their pension plans, diverted some of the money earmarked for pension contributions to dividends, executive mega-salaries and general operations. Now after five years of stock market decline...." You get the picture.
Of course the executives who apparently failed to foresee that markets go down as well as up, who raided their workers' pension plans while mismanaging their companies to the point of collapse, have done okay themselves. As United CEO Glen Tilton tries to shed his commitment to employees, he retains his own $4.5 million pension trust.
It's a continuing trend. In 1985, there were 112,000 defined benefit pension plans - the kind that guarantee a monthly annuity check when you retiree. Today, there are only 35,000 of them left. More than 50 percent of workers who had defined benefit plans in 1980 have lost them. In most cases, they have been replaced by 401(k)-type plans where the employee contributes much or most of the funding and bears the risk of market fluctuations.
The fact that union workers have deferred wage gains for years to win health and retirement security gets lost in the storyline about industries handicapped by their "generous" benefits. In every round of bargaining, CWA members and others have to fight to keep these benefits.
Of course, Social Security becomes ever more important as corporate America demolishes a major pillar of middle-class retirement security, the pension. And now President Bush wants to chop that crucial pillar as well. Amazingly, Bush's plan for "reforming" the system would be worse than doing nothing at all (See Social Security article).
The projected shortfall in Social Security can be resolved through gradual and modest increases in contributions to the trust fund that fall mainly on wealthy individuals and corporations. For instance, at least half the funding deficit would be erased by raising the income ceiling for Social Security contributions from the current $90,000 to $140,000-well above the income of most working people, and within the means of high-earners.
For example, last year, Verizon CEO Ivan Seidenberg had paid off his Social Security obligation by 3 p.m. on Jan. 2 (based on straight salary, no perks).
Here's when other CEOs of CWA employers hit the $90,000 pay mark: For GE head Jeffrey Immelt, 1 p.m. Jan. 3; for Disney/ABC Chairman Michael Eisner, 3 p.m. Jan. 3; and for Delphi CEO J.T. Battenberg III, 9 a.m. Jan. 7.
Is it too much to ask the Seidenbergs and Eisners and other high-income-earners to contribute a few more workdays to preserve our most successful and critically important social program?
They represent the wealthy interests who, along with the White House, want to sell us on an "ownership society," where workers fund their own health care and retirement with little or no help from employers or government programs.
To them, ownership society really means-"We own it, and you're on your own."
In fighting United's bankruptcy ploy to hand its pension obligation to the government-backed Pension Benefit Guaranty Corp. (PBGC), AFA-CWA flight attendants are fighting on behalf of millions of other workers, who are counting on contractual pensions, as well as American taxpayers who will foot the bill for bailing out the PBGC when it collapses.
If the United pension termination stands-CWA is appealing the backroom deal between United and the PBGC in federal court and backing a bill to postpone the termination-other corporations will get in line to hand their obligations to the public too.
The ripple effect would include weaker airline competitors, such as Delta, Northwest and Continental, and likely move on to the big automakers and others, business writers are speculating.
Meanwhile, the PBGC, which went from a surplus of $9.7 billion in 1999 to a current deficit of $23.3 billion last year from assuming corporate pension liabilities, will require "a federal bailout that could rival the S&L catastrophe of the early 1990s," according to Fortune magazine.
A potentially huge crisis looms. Of all the existing defined benefit pension plans, 75 percent are under-funded - lacking the assets to pay out their benefit obligations. The reason, writes UCLA professor Katherine V.W. Stone, commenting on United's plight in the Washington Post: "In the stock market boom years of the 1980s and 1990s, the funds became so flush that United, like many large corporations with surpluses in their pension plans, diverted some of the money earmarked for pension contributions to dividends, executive mega-salaries and general operations. Now after five years of stock market decline...." You get the picture.
Of course the executives who apparently failed to foresee that markets go down as well as up, who raided their workers' pension plans while mismanaging their companies to the point of collapse, have done okay themselves. As United CEO Glen Tilton tries to shed his commitment to employees, he retains his own $4.5 million pension trust.
It's a continuing trend. In 1985, there were 112,000 defined benefit pension plans - the kind that guarantee a monthly annuity check when you retiree. Today, there are only 35,000 of them left. More than 50 percent of workers who had defined benefit plans in 1980 have lost them. In most cases, they have been replaced by 401(k)-type plans where the employee contributes much or most of the funding and bears the risk of market fluctuations.
The fact that union workers have deferred wage gains for years to win health and retirement security gets lost in the storyline about industries handicapped by their "generous" benefits. In every round of bargaining, CWA members and others have to fight to keep these benefits.
Of course, Social Security becomes ever more important as corporate America demolishes a major pillar of middle-class retirement security, the pension. And now President Bush wants to chop that crucial pillar as well. Amazingly, Bush's plan for "reforming" the system would be worse than doing nothing at all (See Social Security article).
The projected shortfall in Social Security can be resolved through gradual and modest increases in contributions to the trust fund that fall mainly on wealthy individuals and corporations. For instance, at least half the funding deficit would be erased by raising the income ceiling for Social Security contributions from the current $90,000 to $140,000-well above the income of most working people, and within the means of high-earners.
For example, last year, Verizon CEO Ivan Seidenberg had paid off his Social Security obligation by 3 p.m. on Jan. 2 (based on straight salary, no perks).
Here's when other CEOs of CWA employers hit the $90,000 pay mark: For GE head Jeffrey Immelt, 1 p.m. Jan. 3; for Disney/ABC Chairman Michael Eisner, 3 p.m. Jan. 3; and for Delphi CEO J.T. Battenberg III, 9 a.m. Jan. 7.
Is it too much to ask the Seidenbergs and Eisners and other high-income-earners to contribute a few more workdays to preserve our most successful and critically important social program?
They represent the wealthy interests who, along with the White House, want to sell us on an "ownership society," where workers fund their own health care and retirement with little or no help from employers or government programs.
To them, ownership society really means-"We own it, and you're on your own."