supa7E7
Posts: 1360
Joined: Fri Aug 27, 2004 2:05 am

United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 5:14 am

So the PBGC is taking over United's pensions. While UA made lots of revenue, they still could not pay the workers at negotiated rates. So they went bankrupt.

Now I as an American taxpayer have to pay the pensions which were demonstrably impossible to pay?!?!? UA is one of the world's highest revenue airlines. Yet the negotiated pensions and salaries drove them under.

Talk about abusing BK law. This is an outright handout from the govt to UA workers. I for one have no desire to pay such a reward to union workers whose company crumbled under their demands. JMO. comments?
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StevenUhl777
Posts: 3281
Joined: Sun Jul 08, 2001 11:02 am

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 5:20 am

So the PBGC is taking over United's pensions

Nope. Not all of UA's pensions, not yet, anyway. Only the pilots have reached an agreement thus far with the company, and only their pensions are being handed over to the PGBC as of now. But, the pilots are also getting approx. $500mm in convertible bonds that will help offset the loss. Furthermore, not the entire amount of the underfunded portion of the pilots pension will be absorbed by the PGBC. Right now, $2.9B is underfunded, but the gov't. will only assume $1.4 or $1.5B. Source: article on USA Today, Money section.

Don't know about the AFA, but I've heard the IAM and amfa are negotiating right now, but still no agreement.



[Edited 2004-12-30 21:22:27]
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NWAFA
Posts: 1843
Joined: Wed Dec 31, 2003 10:30 pm

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 5:40 am

So UA gets to continue abusing BK, and the US tax payers get to grab the check.
THANK YOU FOR FLYING NORTHWEST AIRLINES, WE TRULY APPRECIATE YOUR BUSINESS!
 
FRA2DTW
Posts: 236
Joined: Wed Feb 11, 2004 6:51 am

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 5:49 am

This was obviously a politically facilitated deal. I wonder who the PBGC got a phone call from to quit their opposition to this bailout. A sad day for U.S. taxpayers.
 
kellmark
Posts: 543
Joined: Thu Dec 21, 2000 12:05 pm

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 6:34 am

First of all, the taxpayers are not out even one dime as of yet. The pensions are paid by contributions from companies in the plan, not by taxes. There is the possibility of taxpayer money being involved if the PBGC can no longer pay out to those participants who are covered in the future. But that is not an absolute either, as contributions can also be increased.

Also, all pensions that are terminated and go into the PBGC, are adjusted and payments to retired employees are generally reduced significantly. Just ask the ex-Eastern, Pan Am and Braniff employees how happy they are with what they got. Most employees get far less than what they would have gotten had their plan not been terminated. Also, there is a cap on benefits, which affects especially those with higher monthly benefits, such as pilots.

This plan was set up as thousands of employees had had their pensions looted by management and were left with nothing. At least this program offers some minimal protection for people who have worked 20 or 30 years or even longer, and then wound up with nothing.
 
NWAFA
Posts: 1843
Joined: Wed Dec 31, 2003 10:30 pm

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 6:58 am

Kell,

As a fromer Pan Am employee I can tell you that we are not happy with what happend to the pensions!
THANK YOU FOR FLYING NORTHWEST AIRLINES, WE TRULY APPRECIATE YOUR BUSINESS!
 
CTHEWORLD
Posts: 463
Joined: Fri Dec 10, 2004 5:27 am

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 7:32 am

Like Kell said, the PBGC pool of money is funded by premiums charged to companies, not by a Federal budget item. That being said, if the PBGC can't cover their liabilities then one should look at the PBGC's management, not the companies that utilize the service. Holding a company at fault for falling back on a system that was set up by the government is like blaming a college student for taking government grants and government backed loans to pay their tuition. There is no "abuse of the bankruptcy laws", everything that is going on with the UAL ch. 11 proceedings is being watched by the Justice Dept. and the FTC...so far they haven't called foul. Also, it is interesting to see how the PBGC at first said that they would oppose any UAL turn over of its obligations, then when it is convenient and fortuitous for the PBGC, they run in and assume the debt, regardless if it endangers UAL's and ALPA's previous agreement.

In my book, the Bush admin is batting 0 for 2, with PBGC and keeping that conflict of interest idiot Norm Minneta in the cabinet. (for the record, I am not Bush bashing, I just don't like some of his more "hands off" decisions when it comes to fostering U.S. companies)

C
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 8:00 am

That is precisely why they have responded as they have. The so called "deal" that UAL and ALPA made was contingent on the present pilots pension plan running through May 2005, when the full PBGC guarantee kicked in. And the PBGC figured it would cost them an additional $140M if they allowed that to happen.

Frankly, I think UAL & ALPA got what they deserved. By making a "deal" where someone else, and yes, ultimately the US taxpayer, picks up the tab is downright low. If you legitimately terminate your plans, do it. But don't do "deals" where the cost of doing so is unreasonably higher than need be.
 
atmx2000
Posts: 4301
Joined: Wed Oct 13, 2004 4:24 pm

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 8:28 am

Defined benefit plans have been a curse to many established industries and companies that have seen the emergence of lean young companies without the legacy of a huge number of retirees from days when productivity was a whole lot lower or regulation was a whole lot higher or foreign competition with lower cost bases due to weaker currencies and lower wages. Pension plans like these ought to be made illegal except for people in high risk occupations. They simply place too much of the burden of retirement costs on the future revenue of a company, which is something that is always at risk either due to mismanagement, new competition, or new techologies. Employees ought to demand their money up front, and employers should stop offering guaranteed benefits to retirees.

The same goes for Social Security, though at least the government is never going to go obsolete or find itself in competition with anyone else. I do think the FICA taxes that employers pay to match their employees shares should be phased out and the Social Security revenue lost should be replaced with a consumption tax. No sense in paying money out to retirees who buy products from companies that don't pay into the program because they employee workers overseas. All that does is cause money to slowly leak out of the domestic economy and puts domestic employers who have to pay taxes on their employees at a disadvantage. And after all, if we are running a trade deficit the consumption tax base is larger than the production tax base. Might as well ensure that people buying a Kia put more money back into the Social security system than they are now. And now that I think about, the same ought to apply to unemployment taxes.
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m404
Posts: 1875
Joined: Tue Nov 25, 2003 4:43 pm

RE: United Pensions & PBGC: Welfare?

Fri Dec 31, 2004 8:47 am

So the PBGC is taking over United's pensions. While UA made lots of revenue, they still could not pay the workers at negotiated rates. So they went bankrupt.

When was this? When did they make lots of revenue? What were the dates and did that coincide with underfunding the pensions?

UA is one of the world's highest revenue airlines

Please provide comparisons such as RPM and CPM with worlds top 20

I for one have no desire to pay such a reward to union workers whose company crumbled under their demands.

I can assure you the workers will get such a smaller amount you will feel a little placated. But you have not seen anything yet. If this goes with all class and craft at UA then you will see a flood of other carriers try to emulate it in any way they can as this would then but them at such a disadvantage they will feel they have to.

What I feel more likely will happen is that the threat of the latter will finally force changes in the BK laws and PBGC rules to prevent such an occurrence. Most likely it will just lessen the chances of pensions being as assured as now so that both Social Security and pensions will exist as the security blankets they are. You can also bet that somehow, somewhere, an attempt will be made to tie retirement funds to Wall Street shares to prop that market up.
Less sarcasm and more thought equal better understanding