United Airlines’ plan to terminate its employees’ pension plans

[Il_Mostro]

[ QUOTE ]

A federal bankruptcy judge approved United Airlines’ plan to terminate its employees’ pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.

[/ QUOTE ]

MSNBC

Can someone explain to me what this means. Does it mean that noone will get any pension money from the corporation? If so, how on earth can that be legal? If pension is part of my benefits, how can the company back out? I know they could not do it around here.

Or does it just mean that no more money will be put into the pension fund? And if so, doesn't your employment contract specify how much pension money you should receive?

[whiskeytown]

generally, it means no more pensions are getting paid - it's something they could dissolve to become more profitable again. That's why it took bankrupcy court.

In this case, it sounds like they're gonna pay 3/4th of the pension -

Some people have noticed that airlines became unprofitable shortly after deregulation started, but hey, that's free enterprise, right? - We can't have the govt. regulating things like air travel - Free Market Capitalism, man!!! - (Until the next taxpayer funded bailout)

Chalk up another one for big business [censored] over several thousand retired employees.

RB

[nicky g]

Bankruptcy generally allows you to default on some of your obligations.

[Il_Mostro]

Yeah, it seems like it. I guess I just cannot understand the rationale behind pensions being one of those obligations.

[Rex Nihilo]

[ QUOTE ]
Can someone explain to me what this means. Does it mean that noone will get any pension money from the corporation? If so, how on earth can that be legal? If pension is part of my benefits, how can the company back out? I know they could not do it around here.

Or does it just mean that no more money will be put into the pension fund? And if so, doesn't your employment contract specify how much pension money you should receive?

[/ QUOTE ]

Anything is legal when you make huge campaign contributions to lawmakers.

[ACPlayer]

It is getting more so.

The users of overaggressive credit card giveaways to poorly qualified people, have got the govt to bail them out when a citizen defaults and files for bankruptcy.

However, the corporation can default on pensions obligations, passing the buck to the federal pension guarantee agency (i forget the exact name of the agency). Of course setting up the agency (during Nixon's term I believe) was a recipe for this sort of thing.

[adios]

You should read up on Chapter 11 in the bankruptcy code. Just do a Google search. I find it ironic that when disputes are settled by a court of law, if the outcome doesn't jibe with what someone believes it should be the system is rigged and when it does the system is fine. Also when a "safety net" is provided making it possible to "game' the system, the system is corrupt when an entity that takes advantage is one that someone is pre-disposed to be against while if an entity that someone is pre-disposed to support games the system that's just fine.

Sooooooooooooooooooooooooo typical.

Do a google search the safety net that the U.S. provides for corporate pensions. Also there is a good article in yesterdays WSJ about the problems France is having with pensions that they've guaranteed. I want to post something on it because the benefits provided are quite lucratitive and it's a good example of the European welfare state in action. The pros and cons of the welfare state are worth discussing IMO. I think it's fair to say that there's a significant portion of the U.S. that would be very negative on what has evolved in the particular instance written about. However, in light of some of nicky's comments about violent crime vs. the welfare state and some factors such as people losing some of their pension benefits perhaps people shouldn't be so negative. I am but heh. Also I'd point out that IMO GM will spin off it's GMAC unit to shareholders and leave the car manufactuing part of the business as a separate entity. When this happens IMO GM will file a chapter 11 and seek to get it's pension liabilities reduced.

[lehighguy]

It's kinduv like a corporation declaring bankruptcy and not having to make good on its liabilities (pensions).

A lot of companies with strong unions negotiated pension deals with the company that the company has no way of paying off (General Motors, others). The company knows it can't afford it but the problem doesn't effect it for a generation so most of the managers who made the deals are gone by then.

The same thing is going to happen with SS in 20-40 years since it suffers from the same problem of not having any assets to pay off its liabilities.

[HDPM]

The problem is a complex one. What it comes down to IMO is years of refusing to look at reality. Labor, management and government are all guilty on this one. Whatever the law says, if the airline doesn't have the money, the pensions aren't getting paid. You can't just imagine your way to enough profit to pay the contracted benefits. So there is no money. For years airlines made false profits through government regulation at the expense of citizens. And unions bargained for great retirement benefits and got them. Incompetent management couldn't see that it couldn't last really, and then made a lot of mistakes. So we have a disaster. And taxpayers are going to get stuck with the bill because the prospect of seeing people screwed out of what they earned is so bad.

I have some relatives affected by this, and I spoke to one who started at united in the '60's in the regulated era. And retired with the pension his union bargained for and he worked his ass off for. I asked him what people would have said back then if somebody questioned whether airlines could last forever (as they existed then) and be around to pay big retirement benefits. He said people would have thought you were insane. The lesson is to teach your children that they can NEVER rely on a "guaranteed" benefit provided by industry or government. There is no guaranteed payment, ever, for anything. You cannot trust the government or corporations to somehow provide for you, just because they seem so big and stable. Reality has a way of getting in the way.

[andyfox]

"I find it ironic that when disputes are settled by a court of law, if the outcome doesn't jibe with what someone believes it should be the system is rigged and when it does the system is fine."

I don't think that's quite what people feel. In general, we fell our "system" is fine. That's why we continue to live here and love our country. But there are certain aspects of it we don't think are fine and we don't love (or even like). That is, the system is a good one, but, like anything else, it has flaws. It is natural, I think, for people to be upset when they hear about, say, United employees not being able to get the pensions that they thought they were than about, say, the CEO getting a smaller bonus than he received the previous year.

In my industry, meany of the major retailers who filed Chapter 11's in recent years have had assets in excess, sometimes far in excess, of their liabilities. What they had were leases in certain malls or other retail locations that were deemed undesirable. So, in order to get out of those leases, where unprofitable stores were located, they went Chapter 11. I don't know if the recent bankruptcy legislation addressed this issue, my sense was that it only addressed consumer debt.