U.S. to Take Over UAL Pilots' Pensions

[getonit]

I have a question.

Why should the government guarantee anybody's pension?
I have never and probably never will get one. I am on my own, with my 401K and own personal responsibility to take care of myself. As it is the companies can promise whatever they want and what the unions can get and hope everything works out and if it doesn't the government will take care of the screwups. It is not fair to companies that "play by the rules", it will simply force the other majors to declare bankruptcy to get the weight off of their necks.

This is not a problem with just the airlines, wait until the American auto industry can't pay their bills on this, one will file BK and the others will have no choice but to do the same thing.

 

[redflyer65]

The government never was into backing pensions until there was a law passed by congress (some time back, the date escapes me), that said these large corporations didn't have to fund the pensions 100%. The companies I guess thought it was too much of a burden, and the cash could be used somewhere else, instead of what it was supposed to be used for. I can't believe it ever passed, but here we are. It amounts to fraudulent activity, just my opinion.

 

[Snoopy58]

Why should the government guarantee anybody's pension?

Ask the liberals. They're the ones that got the government into the insurance business. Sounds great, my savings account at the local S&L is government insured, and so is my pension. And even though the FDIC & FSLIC and the PBGC are quasi-governmental organizations, it doesn't cost the taxpayer anything because the costs will be covered by premiums the healthy banks / S&L's / pensions pay in. Mostly. When things are going well.

BUT... you get a LOT of S&L's all start failing at once, and then the choice is either to dump the costs onto the government, i.e. us taxpayers, or Ma and Pa find out that their "insured" savings account wasn't really so insured after all. We all know what happened there. Now the pensions are going the same way, with the situation worsened by the fact that even the healthy pensions are going away because companies see them as an albatross around their necks -- growing numbers of retured workers being supported by a business in a competitive environment. So fewer healthy pensions are paying premiums, more unhealthy ones are failing, and the rational competitive response for American, Delta, Northwest, etc is going to be to do just like United did and stick us taxpayers with paying off the promises they've made over the years.

It boils down to us now seeing the ultimate effects of a bad decision taken decades ago coming home to roost. Of course the government had no business insuring bank accounts or pensions... the competition of the free market is mighty good about setting costs for such things, and the free market sets far higher premiums to insure bank accounts or pension plans than what the government was charging. Free lunch? Nope. But the guys who started this debacle rolling decades ago have all retired now, and we're stuck with their mess.

Let this be a warning next time somebody has the solution of "let the government take care of that problem!"

 

[slowto250]

An old game with new players

It is much easier to play "Stiff the creditors", and " Let's lower our labor costs", than it is to create innovative business plans, or to include employees in incentive based business plans. Don't believe me ? Ask Frank Lorenzo. World class player.

 

[fatboyplt]

Gentlemen,

Might I interject that currently only the MEC has agreed to any of the TA. The pilots of UAL are currently in the process of voting and that will close on Jan 6th. So nothing has been cast in stone as of this moment. If you are flying the line with us then you will know that there is huge spectrum of opinions alot of which can not be uttered in polite society... Birdman

 

[canyonblue]

.....

 

[philo beddoe]

Where does the cash come from to pay the pensions?

 

[skykid]

FATBOYPLT, I agree that the thing hasn't even been voted on yet, but I would say whether the defined pension goes away or not has absolutely nothing to do with the vote. The big picture is that not United now, nor Delta and American and the rest of the airlines with defined pensions in the near future, are going to compete domestically with the LCCs that don't have defined pensions. Or maybe we should wait and see what Virgin USA's defined pension looks like.

You can argue over the details of the UAL tenative agreement with the pilots, but sooner or later it comes down to no pension-with job, or no pension-no job. There are two realities to come to grips with to fully understand this. First United is not coming out of CH11 with defined pensions. To deny this means disbelieving all the potential lenders. And the reason the lenders are insisting on shedding the pensions gets to reality number two. Even a fairly healthy defined pension plan right now, is not going to compete in this market with all the airlines that don't have them in the longer term.

I don't know if United will survive even if they can scrap all the pensions w/o too much upheavel. If you had told me oil would go over $50/barrell two years ago I would have said that's the end right there. We'll see.

 

[a320drivr]

It comes from you, the tax payer.

 

[fam62c]

What happens to the retirees?

I have a relative who is a retired UAL pilot and retired 18 years ago at the age of 60. What happens to his retirement at this point? Do the retirees get the same benefit they had before or do they get paid at a reduced amout? If the benefit is paid at a reduced amount is it a percentage or is there simply a flat amount that they pay to everyone who has a pension that's been taken over by the PBGC. Just curious how this works.

I fear that this is going to cause all of the majors to seek termination of their DB plans in order to be on equal ground with airlines that don't have them. It looks like DB plans will be a thing of the past for people that work in private industry. I'm worried that this is the first step towards employers eliminating ALL contributions to employee retirement including 401K matches. This is going to put airline pilots at a real disadvantage financially because we are forced to retire at 60 while other employees can work much longer. I wonder how long it will be before the PBGC starts lobbying for the end of the age 60 rule.