If you think that the only thing you have to worry about regarding your retirement is if Social Security is healthy then you better think again. The scandal taking place in private retirement programs is becoming a much bigger problem and its being largely ignored by the both media and the legislature.
While the questions raised about the future of Social Security benefits has left us looking for a pea of truth under moving shells of deception we are being kept from seeing the much larger picture of private retirement funding problems.
It comes as no surprise that many sectors in the economy are having a hard time today but it is being underplayed just what this means for the future of retirement in America. For example take the recent case of United Airlines and its bankruptcy. On the surface it’s a pretty cut and dried case of a problem sector company (air transportation) filing for business bankruptcy.
But the facts of this bankruptcy go much deeper than that. United Airlines is being allowed by the bankruptcy court to screw its employees out of their pensions. The bankruptcy court ruling in this case has resulted in United Airlines pulling off the biggest default in the history of retirement funds. This ruling is a sad day in American judicial history.
Worse yet with many airlines (not just United), auto manufactures (including GM) and retailers (like Kmart) seeking protection through, sale, reorganization, or bankruptcy we will continue to see huge under funding in employee retirement programs. While the companies involved are allowed to walk away from these obligations the employees and tax payers will be stuck with them.
We have seen the federal Pension Benefit Guaranty Corp. go from a $10 billion surplus to a $23 billion deficit in under 7 years. (The PBGC is the federal agency which insures traditional pension plans.) And while most Americans know even less about the PBGC, which is maintained by corporate premiums, than they know about the Federal Depositors Insurance Corp. (that insures bank security) they will soon be made aware of their precarious situation.
Currently the PBGC has $39 billion in assets while having and estimated $63 billion in long term liabilities. At the same time, the PBGC estimates that the total under-funding in the pension system(that it could be at risk for coverage) has reached a record $450 billion. At this rate the under funding problems of Social Security look puny by comparison.
No insurance program can endure that kind of outflow and of course the tax payer is on the hook for any amount needed to bail out the system. This problem has the potential to make most of the scandals of the last few years ago look small and insignificant by comparison.
It also comes at a time that couldn’t be worse for the American worker. This hemorrhage of red ink is threatening our private retirement system just when it will be needed to help shore up retiree’s incomes during the coming Social Security crises.
So while major corporate salaries are still in the stratosphere and worker salaries are being pummeled by the twin terrors of outsourcing and lowered earnings we watch as corporate thefts of the night busily stealing our retirement funds. There use of corporate bankruptcy laws comes after new legislation that has personal bankruptcy more restrictive and harsher than at any time in recent history.
We are watching corporate America steel our retirements from us while penalizing us by making us pay for it as never before.
What can be done to resolve this problem before it’s too late?
We can start by recognizing the problem and facing the fact that we’re already been ripped off to the tune of Billions of dollars. Companies are failing to pay the funds to employee’s retirement programs that they are obligated too under their existing contracts.
That must be put to a stop!!!!!
We all need to be writing our Congress men and Senators demanding that such events as have happened with United Airlines not be allowed to continue.
We also need a much higher premium for corporations paying into PBGE if we are to end the shortfall that exists with the PBGC while we can still can. Corporations are getting a rate that is much too low for the risk that is being assumed and they must be made to pay up.
We need bankruptcy laws that protect retirement fund payments from forgiveness. It’s time that the employee receives the necessary protection to prevent him from being left holding the bag. Under current law they lose twice; once as the employee and again as the tax payer.
So remember you’ve been warned!
You neglect this problem at your own peril.
Failure to act will doom this next generation of retirees to face the worst conditions of any group of retirees in America since Social Security was instituted.