Save Your Money Up For When You Get Old
Several years ago, my employer had a run-in with several federal agencies over its stated desire to pay pension costs on an as-you-go basis, insisting that no one vested would suffer any loss, and that it would ease the financial burden on the company. These Federal agencies disagreed, stung by intense public opprobrium over the not-too-distant memories of Envirodyne stiffing their Wisconsin Steel pensioners as the dawn of the Era of the Leveraged Buyout began in 1978. "You will set aside funds to cover your pension liabilities" they told my employer, who grudgingly surrendered about $180 million (out of a total profit of $270 million that year), which covered pension obligations stretching back 30 years. This cost the boss a hefty bonus that year, and in retaliation, we had to begin paying for our medical insurance coverage so that there would be something available for him to award himself a bonus every year.
I'm sure that, had the Congress been so pliable back then, he would have applauded the following action:
Congress passed a bill that would relieve companies from contributing an extra $80 billion into their pension plans and sent it to President Bush for his signature. Supporters said the bill frees companies from making unnecessary contributions, money that would be better spent on job creation.
Now WHY do I doubt this is going to be the purpose this money will be used for, instead of becoming the lining of someone's well-heeled pocket?
The bill reformulates an outdated equation that companies use to calculate pension contributions. The Pension Benefit Guaranty Corp. estimates it would save firms $80 billion during the two years the formula would be in place. Struggling airlines and steel companies, along with Greyhound Lines buses, also get some temporary relief from payments needed to replenish underfunded pension plans.
It's sounding like Wisconsin Steel all over again. "Screw the old timers! What have they done for us lately? They aren't generating any profits anymore! If they haven't saved all their post-living expense money for their old age, then they have been profligate with their money, and that isn't my concern!"
Is there no hero, no white knight, to ride to the rescue, like in the old serials?
Senate Minority Leader Tom Daschle (D-S.D.) said the measure left out numerous pension plans "that now have absolutely no hope and will be lost."
Thanks for those strong words, Tom. Seen your balls lately? And what of the party to which those with hope turn to in their hour of need?
Democrats weren't united against the pension bill, however. Several large unions pushed for passage, including the United Auto Workers and the Airline Pilots Association. One company that benefits: United Airlines.
Admittedly, United has been having problems, but what did they do with all that cash Congress awarded them and American right after 9/11???? Anyone check the pocket linings of the airline execs lately?
This is not a good sign for those in these businesses, but what about the rest of us?
Watch for: More problems for pension plans in the months ahead, because Wall Street is no longer a cash cow. The stock market's modest gains in the last three years have left many plans high and dry.
Oh-oh! So much for being able to retire someday! I certainly hope I can still afford cat food on what Wal-Mart pays, for I'll be too old to catch rats.