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Lehman & PBGC for WORKER BEE's
Old 09-15-2008, 09:56 PM   #1
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Lehman & PBGC for WORKER BEE's

Now I am not an expert on this.. but I just wondered how many retirees and active employees got pensions kicked to the PBGC today. It seems that an old company with 25000 active US employees ought to have say another 40000 to 50000 retirees already? What do you think?

This may be the largest group dumped into PBGC ever. Remember that Worldcom and Enron were both ultra high but short term growth companies. They were not decades long venerable institutions.

How long till we get to start picking up the tab for this? PBGC may not be funded for the first decade of this century.

Also, I bet a lot of early retirement types just got totally blindsided. I feel really bad for the working folks there.
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Old 09-15-2008, 10:00 PM   #2
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Also, I bet a lot of early retirement types just got totally blindsided. I feel really bad for the working folks there.
Yep. Kinda puts moping around because your portfolio tanked by 2-4% today in perspective, doesn't it?
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Old 09-15-2008, 10:10 PM   #3
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Lehman Brothers - Wikipedia, the free encyclopedia

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On September 11, 2001, Lehman occupied three floors of One World Trade Center where one employee was killed. Its global headquarters in Three World Financial Center were severely damaged and rendered unusable by falling debris, displacing over 6,500 employees. The bank recovered quickly and rebuilt its presence. Trading operations moved across the Hudson River to its Jersey City, New Jersey, facilities, where an impromptu trading floor was built and brought online less than forty-eight hours after the attacks. When stock markets reopened on September 17, 2001, Lehman's sales and trading capabilities were restored.
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Old 09-16-2008, 11:05 AM   #4
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why wouldn't LEH employees have 401k's?
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Old 09-16-2008, 11:11 AM   #5
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Aren't the pension assets independent (by law) of the company assets ? If that's the case then there is no need to get PBGC involved at this point. In theory the pension assets are secure.

The workers who have not yet vested will be shortchanged though based on the pension accrual rules. Pension benefits are usually very much back-loaded.
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Old 09-16-2008, 11:39 AM   #6
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why wouldn't LEH employees have 401k's?
I am sure that 90% or more do have 401K's and that is a large part of most folks retirement. But most folks of a certain age plan for 3 sources of retirement income pension, 401k and then SS. The pension is frequently but not always the largest.
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Old 09-16-2008, 11:48 AM   #7
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the way things have been the last few years most of them should have gotten nice bonuses to fund Roth's as well as put a lot of money away
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Old 09-16-2008, 12:55 PM   #8
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Pensions don't just get "kicked" to the PBGC. PBGC becomes a creditor in a bankruptcy just like everyone else. Many companies go through bankruptcy and come out on the other side with their plans intact. Don't know what will happen here, but your premise is very premature.
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Old 09-16-2008, 04:11 PM   #9
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United Airlines went into Ch 11 at the end of 2002, the PBGC didn't take over the pilots' pension plan until early 2005.
Of course, that was a company that was expected to emerge more-or-less intact from Ch 11, Lehman might be a different story.
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Old 09-16-2008, 04:21 PM   #10
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I'm starting to wonder if all of this is going to bring the "pension envy" concept to the breaking point. If enough taxpayers who do not receive a pension would have to pay higher taxes to preserve the benefits for those who do -- the have-nots bailing out the haves -- by propping up the PBGC, it could get ugly. I hope not, but I certainly see that potential, particularly if the economy continues to suck and people watch their retirement dreams go up in smoke amidst a sea of red portfolio numbers.
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Old 09-16-2008, 04:42 PM   #11
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Originally Posted by crazy connie View Post
Now I am not an expert on this.. but I just wondered how many retirees and active employees got pensions kicked to the PBGC today. It seems that an old company with 25000 active US employees ought to have say another 40000 to 50000 retirees already? What do you think?
Actually, they do have a defined benefit plan which was overfunded as of the last 5500 by about $150M. They had 22,000 participants and 13,000 retirees

You can view the details on freeerisa.com

BTW: I already have pension envy
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Old 09-16-2008, 04:58 PM   #12
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I'm starting to wonder if all of this is going to bring the "pension envy" concept to the breaking point. If enough taxpayers who do not receive a pension would have to pay higher taxes to preserve the benefits for those who do -- the have-nots bailing out the haves -- by propping up the PBGC, it could get ugly. I hope not, but I certainly see that potential, particularly if the economy continues to suck and people watch their retirement dreams go up in smoke amidst a sea of red portfolio numbers.
Interesting question..... but exchange "pension envy" with "social security" and I think the answer would be about the same.... and for much the same reasons...
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Old 09-16-2008, 05:03 PM   #13
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Interesting question..... but exchange "pension envy" with "social security" and I think the answer would be about the same.... and for much the same reasons...
Yes, you're right, but the difference is that *right now*, just about everyone who works is eligible for Social Security, so "saving" it doesn't feel like you're ONLY benefitting other people at your expense. Granted there is a generational equity aspect to the discussion, though, as SS seems fated to seeing each successive generation getting a worse deal than their parents did.
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Old 09-16-2008, 09:04 PM   #14
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Originally Posted by MasterBlaster View Post
Aren't the pension assets independent (by law) of the company assets ? If that's the case then there is no need to get PBGC involved at this point. In theory the pension assets are secure.

The workers who have not yet vested will be shortchanged though based on the pension accrual rules. Pension benefits are usually very much back-loaded.

This is my understanding also..........the pension assets are held in a trust...not to say the trust could not be mismanaged or underfunded, but that's more likely when the company is struggling for many years and/or making liberal estimates about the pension growth to reduce the amount they need to contribute to keep it adequately funded.

We get an annual statement for the status of our pension fund which I believe is required by law........too bad its really just a bunch of assumptions.
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Old 09-17-2008, 08:55 AM   #15
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Actually, they do have a defined benefit plan which was overfunded as of the last 5500 by about $150M. They had 22,000 participants and 13,000 retirees
...
The United pilot's pension plan was funded about 110% in the last annual report before 9-11. I retired at the mandatory age (60, June 2005) but only collecting 22% of the pension I was supposed to get. The math is complicated, to put it mildly.
Fortunately, I was saved by a very large DC plan and a supplemental lump negotiated by the union. Many others were not so lucky.
The short version is that if you are 65 or older, and had a small pension to begin with; a pension termination will not hurt much. If you are younger and had a big pension benefit, bend over.
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Old 09-17-2008, 10:51 AM   #16
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... SS seems fated to seeing each successive generation getting a worse deal than their parents did.
It may seem that way, but SS can eventually stabilize, giving each generation an IRR equal to the growth rate of total wages.
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Old 09-17-2008, 12:49 PM   #17
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It may seem that way, but SS can eventually stabilize, giving each generation an IRR equal to the growth rate of total wages.
Wow, the folks at SS have you hornswaggled........
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Old 09-17-2008, 08:21 PM   #18
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Wow, the folks at SS have you hornswaggled........
What makes you say that?
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