Pension Scam

Make as much money as possible and don’t depend on some pension plan for your security. Why the bluntness? Consider this excerpt of incompetence from the June 27, 2006 WSJ:

“Delta Airlines announced last week that it will terminate its pilot pension plan, becoming the latest airline company to flip liabilities to the federal Pension Benefit Guaranty Corporation (PBGC). Congratulations, taxpayers. You’d think this might upset Congress, or at least inspire some reforms. But no such luck. In fact, House and Senate conferees are busy negotiating another pension fix that would give airlines one more reprieve and make taxpayers even more vulnerable to airline mismanagement down the road. Since 2002, far too many airline, steel, auto and other companies have dumped their pension plans on the PBGC, the quasi-government agency that “insures” private pension plans. That body has gone from a $10 billion surplus in 2000 to more than a $23 billion deficit last year, and it is the financier of last resort for a private defined-benefit pension system that is underfunded to the tune of $450 billion. On present trends, this could become a fiasco on the order of the savings and loan collapse. This is what happens when Congress socializes what ought to be private labor contracts. The theory behind the PBGC was that it would collect enough premiums from companies to cover future liabilities. But as always in Washington, unions and powerful industries have worked the political system to prevent premiums from reflecting real market and business risks. The result is today’s underfunding and a looming taxpayer bailout. Congress has known about this for a long time. But it made everything worse with a previous election-year “reform” in 2004 that gave special breaks to the most underfunded companies rather than requiring that they put their pensions on a sound footing.”

Who is incompetent here? The airlines, the government and the employees. Everyone is guilty of trusting someone or something. That is a bad prescription today and into the future.

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