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Old 07-08-2008, 09:45 AM   #121
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... sounds like the Massachusetts teachers union...
Sounds like ANY teacher's union............
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Old 07-08-2008, 11:04 AM   #122
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Originally Posted by al_bundy View Post
where is the money going to come from to pay these pensions? that is the whole point.
If the company was playing by the rules, the pensions are supposed to be funded to meet obligations, on an ongoing basis. These benefits are not
gifts from a benevolent company. The employees work to earn them, just as they do other forms of compensation.
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Old 07-08-2008, 11:07 AM   #123
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I understand where you are going with this, but there's a big difference. When a company provides defined contribution benefits (such as a 401K match), its future liability is essentially over. They take the money off the books as an expense for good. When a company assumes liability for a defined benefit pension for another year of service, the impact is also on *future* liabilities -- and what's worth, that "future" amount is unknown. It was that uncertainty -- combined with sometimes poor return in pension funds and people retiring earlier and living longer -- that made DB pensions (and retiree health insurance) a very dangerous promise to make.

It's already repeating itself in state and local governments.

I don't like that a company can just screw its workers by declaring bankruptcy. But then, to *some* degree the UAW and others were insisting that the goose lay too many golden eggs, and the goose's squawking about it largely fell on deaf ears. So I wouldn't say the union is getting what it deserves, but merely that it's a reminder that no amount of sky-is-the-limit future promises is any good if they are bankrupting the business that pays for them.

At one time people thought pensions were "untouchable" also. They are supposed to be funded on an ongoing basis. And why does this have to be about labor unions? It has happened to employees of all stripes.
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Old 07-08-2008, 11:46 AM   #124
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At one time people thought pensions were "untouchable" also. They are supposed to be funded on an ongoing basis. And why does this have to be about labor unions? It has happened to employees of all stripes.
It's not ONLY about labor unions, but since (a) this thread is about GM and (b) most of the GM pensions and retiree medical benefits which are in question are negotiated by the UAW, it *does* become largely about unions. Don't look for union-bashing where none is present, though; this is just a matter of fact.

The other thing is that highly unionized businesses are mostly the last bastions of pensions and retiree medical. Most businesses that don't have union issues to be concerned with them have already frozen their pensions and many have already scrapped their retiree medical insurance. Many of the ones remaining who haven't, will soon.

These businesses have been able to free themselves from unsustainable future promises and businesses that haven't been able to do so become less competitive in relation.

So it is becoming more and more about unions, albeit indirectly. They have been the ones who have had the most success in getting these promises preserved. The ultimate cost to those businesses (and governments), in some cases, remains to be seen.
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Old 07-08-2008, 03:15 PM   #125
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OK, first you say it's not about unions, then you say it is. Have it both ways LOL! I don't have a dog in that fight. I understand the accounting issues, and it is obvious that DB pensions are dinosaurs, and will give way to DC retirement plans or 401K's. Many of us (me) started working before there was such a thing as an IRA, let alone a 401K. DB pensions were quite common, now they are being ruthlessly terminated by the Mega Corp's in BK. I'm just enjoying being a voice in the wilderness for the older folks who are getting scr%wed in the transition and don't have enough time left to recoup. When the DB pensions and healthcare are all gone where will the Mega Corp's turn in BK to get some quick cash?
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Old 07-08-2008, 03:23 PM   #126
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OK, first you say it's not about unions, then you say it is. Have it both ways LOL! I don't have a dog in that fight. I understand the accounting issues, and it is obvious that DB pensions are dinosaurs, and will give way to DC retirement plans or 401K's. Many of us (me) started working before there was such a thing as an IRA, let alone a 401K. DB pensions were quite common, now they are being ruthlessly terminated by the Mega Corp's in BK. I'm just enjoying being a voice in the wilderness for the older folks who are getting scr%wed and don't have enough time left to recoup. When the DB pensions and healthcare are all gone where will the Mega Corp's turn in BK to get some quick cash?
It's frequently interesting to look at Mega Corp's compensation plan for upper management as a point of comparison when one ponders the fate of the average employee.

Not uncommonly, you'll find something of a disconnect between the two situations.
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Old 07-08-2008, 03:23 PM   #127
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OK, first you say it's not about unions, then you say it is. Have it both ways LOL!
I said it's not ONLY about unions. That's not the same as saying it's not about unions at all.

Neither is saying GM's situation being *largely* related to unions saying it's all the union's fault.

LOL indeed.

I'd reiterate my position as to why there is at least some union complicity in GM's mess (this IS about GM, remember?), but the quote above shows that I can't even be quoted in context so there's no need to bother.
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Old 07-08-2008, 03:53 PM   #128
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Sorry I am late to this party, but I can clarify a few points:

By mike hall: 1. In order for PBGC to take over a pension it insures, the pension must be underfunded, and Co. must be in Bankruptcy.

Not true. The PBGC can take over any pension plan, whether it be fully funded or underfunded; and whether the company is in bankruptcy or not. There are a variety of different types of "terminations" of pension plans.

By Ha - where can you find 5500 data?

Try Welcome to freeErisa.com!, and search for the company. The most recent ones on there will be from 2006.

Not sure who said it "the PBGC is underfunded, so you won't get your full pension" (paraphrased)

True, the PBGC is underfunded, but NOT true, that that is the reason not everyone gets their full pension. The PBGC is an insurer, and insures pensions up to about $51K for pensions terminating in 2008. The amount can be lower if you retired early, because that amount is based on a retirement age of 65.

Hope this helps a little.
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Old 07-08-2008, 04:15 PM   #129
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I was thinking of "distressed" termination. Thanks for the clarification.
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Old 07-08-2008, 04:22 PM   #130
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It's frequently interesting to look at Mega Corp's compensation plan for upper management as a point of comparison when one ponders the fate of the average employee.

Not uncommonly, you'll find something of a disconnect between the two situations.

The same folks who managed the company into a bankrupt condition, often get huge bonuses for sticking around and managing it in BK. Tens of millions.
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Old 07-08-2008, 04:56 PM   #131
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If the company was playing by the rules, the pensions are supposed to be funded to meet obligations, on an ongoing basis. These benefits are not
gifts from a benevolent company. The employees work to earn them, just as they do other forms of compensation.
you have to guess what the obligations are first. when these contracts were negotiated the human lifespan was a lot shorter. when SS was first enacted it was 67, so they made the retirement age 65.

even without getting into statistics, you have to have the sales to support the pensions. few years ago everyone thought the problems were solved because SUV's were being sold. these days the bread and butter of GM is sitting on dealer lots and being heavily discounted so there aren't enough sales to meet future obligations. could be the sales are dropping so much that GM is in trouble with current obligations.
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Old 07-08-2008, 05:00 PM   #132
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It's frequently interesting to look at Mega Corp's compensation plan for upper management as a point of comparison when one ponders the fate of the average employee.

Not uncommonly, you'll find something of a disconnect between the two situations.
executive pensions usually carry a contract clause that the person is not allowed to work for the competition. these usually save the company more money than they cost since a lot of it is in stock options and not cash
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Old 07-09-2008, 09:15 PM   #133
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I understand where you are going with this, but there's a big difference. When a company provides defined contribution benefits (such as a 401K match), its future liability is essentially over. They take the money off the books as an expense for good. When a company assumes liability for a defined benefit pension for another year of service, the impact is also on *future* liabilities -- and what's worth, that "future" amount is unknown. It was that uncertainty -- combined with sometimes poor return in pension funds and people retiring earlier and living longer -- that made DB pensions (and retiree health insurance) a very dangerous promise to make.
Not quite true. With a defined benefit plan, the company theoretically needs to expense (i.e. fund the pension) based on that (increased) future liability. I say theoretically, as that is where a lot of the games have been played (by various companies). So, if we look at GM's assumptions for their defined benefit plan, will we find realistic actuarial assumptions?

Google is my friend:
SEC Info - General Motors Corp - 8-K - For 10/10/07 - EX-10.3

Take a look at the slide titled "Funded Status Projection" where you will see that GM management assumes a 8.5% ROI on their pension assets. (It also shows other figures related to their pension benefit obligations.
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Old 07-09-2008, 09:39 PM   #134
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True, the PBGC is underfunded, but NOT true, that that is the reason not everyone gets their full pension. The PBGC is an insurer, and insures pensions up to about $51K for pensions terminating in 2008. The amount can be lower if you retired early, because that amount is based on a retirement age of 65.
This is true, but it overlooks the fact that if companies continue to default on their pensions, the PBGC will not be able to keep up even with the process shown above. It's just like the FDIC, in that as long as only a few companies/financial institutions fail, the gov't will be able to cover. If there is a significant number of failures, they'll either have to print more money or pay pennies on the dollar.

I worked for a giant telecom, and seeing the way they treated their employees and seeing some of the decisions they made, when I took my early out I took the lump sum. I'm only 52, and I have no faith that they will either be able to or feel like fulfilling their obligations 20 years down the road. It would be so easy for them to do like the airline industry and just hand it over to the gov't.

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