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ERD50 Technically the taxpayers may not have done a bailout like the others so far, but this excerpt from last year may shed light. The PBGC is a federal entity.
The Pension Benefit Guaranty Corp., which covers retiree benefits when companies go bankrupt and their pensions fail, says its deficit for fiscal 2011 was the largest in its 37-year history.
The deficit increased to $26 billion in fiscal 2011 which ended September 30. The PBGC has posted losses in 30 out of the 37 years of its existence, according to its filings.
The PBGC says in a statement that its $26 billion shortfall is a $3 billion increase from the $23 billion reported last year. The PBGC says it has just $81 billion in assets to cover $107 billion in pension obligations.
The PBGC is a federal unit that backs the pension benefits of private pension plans covering an estimated 44 million of America’s workers and retirees in more than 27,000 private-sector pension plans. To get federal coverage, companies pay insurance premiums to the PBGC.
The economic downturn and corporate bankruptcies have helped create the record shortfall. Pension plans are also most widespread in the manufacturing sector which has been hit hard; notably hurting are the auto, airline and steel industries.
I'm curious what light you feel your excerpt sheds? Here is how I read it:
The PBGC says it has just $81 billion in assets to cover $107 billion in pension obligations.
Right, they are themselves 'under-funded' by whatever formula they use. But they still have $81B in assets. I read on their site (don't have the links handy) that they pay out ~ $5.5B annually, and take in $2.4B in premiums from companies. So in round numbers, and keeping things static for simplicity, it would take 81/(5.5-2.4) years for them to burn through their assets if they made zero return - calculator tells me that is .... over 26 years. While that isn't a good number for all sorts of reasons, it does give us some ballpark perspective.
Long before that happened, they could raise premiums. There are many options that could/should be taken before any 'bailout'. For me, the light is not shining in the direction of 'bailout' in any way.
As for my use of 'most', I probably misspoke out of disgust for the whole sore issue of pensions.
Apparently you did, as what you said was not factual at all. As I said, I like facts
Perhaps you could tell us just what actual % of those people who received PBGC payouts took cuts from what they would have received? And what the average and median % cuts were? Someone who is 'only' receiving $4,653.41 instead of $4654.00 could be counted as someone who got their pension cut (Oh, the Humanity!), but in reality it wouldn't mean much. But depending how one might want to present the 'story', I could tell you how that statistic would be used (a 'nuanced detail' for sure). Now
that would be a useful and interesting fact.
If you would read the book, ...
But the recommendation comes from someone who admits to distorting the facts 'out of disgust for the whole sore issue of pensions.'. It is clear to me that the book is telling you what you want to hear. Does the book present the numbers as I outlined above? As I said before, I have the facts, I don't see that any good can come from distortions or nuanced 'details'. If you have some
facts that tell a different story from what I feel I know, please share. As I said before, I am owed a private pension - if I should be more worried than I am, I would want to know.
FYI - I am disgusted with the pension system also. But IMO, pensions should not exist at all - they were a bad idea. A 'promise' is ripe with unintentional and intended failures to deliver. I would much prefer that I just get the money, and do with it as I see fit. A 'forced savings plan' would be needed as there are too many grasshoppers, but the money would have your name on it, no promises to rely on.
-ERD50
