Word: pension
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Already, just about every employ with a pension plan is having to pay soaring retirement costs. At Atlantic Richfield, the eighth largest U.S. oil company, the pension payout jumped from $60 million in 1976 to $80 million last year. The pension burden has become heaviest in the older capital-intensive industries such as steel, rubber and farm equipment, often because tough unions have increasingly asked for fringe benefits instead of simple wage hikes. Among other firms carrying particularly weighty pension loads are Uniroyal, Wheeling-Pittsburgh Steel and the Budd Co. A great many other firms have not taken care...
...Pension fund managers, struggling to keep their pots of money intact, have begun to look beyond the blue chip stocks and bonds in which they have traditionally invested. In June the Government eased the rule limiting pension fund investments to only those that a "prudent man" would make. Now pension funds can invest in real estate or gold or even Picassos and Chinese porcelain. Eastern Air Lines pilots have almost 10% of their $250 million pension fund in Atlanta warehouses, Kansas City shopping centers and Southeastern forests. Such investments seem attractive at a time of rising prices for tangibles...
While the pension problems of private workers are serious, those of public employees can be drastic. Some local governments soon will reap the whirlwind from years of promising elaborate benefits while making insufficient contributions to pension kitties. The General Accounting Office watchdogs reviewed at random 72 state and local government pension plans and found that 53 of them failed to make contributions on the level required by the Federal Government of private corporations. Says Michael Thome, head of the California state teachers retirement system: "Pension costs have been pushed into the future for somebody else to pay. Now, that...
Typical of the many cities or states that face the pension squeeze is Hamtramck, Mich. (pop. 26,000), a working-class town of neat clapboard houses skirting Detroit. Payments for retired Hamtramck public employees could be halted next year. Pension promises in the past were so generous while funding was so skimpy that 99% of the town's property tax income now must be funneled directly into the police and fire pension funds to keep them afloat. One former city employee who contributed only $35 to his retirement plan when he was on the payroll has collected...
Nervous that years of underfunding by corporate managers and abuse of pension funds by some union bosses may have left millions of workers helpless, Congress in 1974 passed the Employee Retirement Income Security Act, which set up the Pension Benefit Guaranty Corporation to assure the payment of vested pensions. The aim was to prevent situations like the one that arose in 1964 when Studebaker stopped production and workers were left with little or no benefits. Now the pension protector is itself troubled. Twice the Pension Corporation has asked Congress to postpone putting into effect new provisions on multiemployer pension funds...