Word: pensiones
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...received the benefit payments until October 1990, when the check bounced. A corporate-takeover artist, later sent to prison for ripping off a pension fund and other financial improprieties, had stripped down the business and forced it into the U.S. bankruptcy court. There the obligation was erased, thanks to congressional legislation that gives employers the right to walk away from agreements with their employees. To support herself, Whitehouse had already sold the couple's Montana home and moved to the Salt Lake City area, where she had family and friends. With her savings running out, she applied early...
Through no fault of her own, Whitehouse had found herself thrust into the ranks of workers and their spouses--previously invisible but now fast growing--who believed the corporate promises about retirement and health care, often affirmed by the Federal Government: they would receive a guaranteed pension; they would have company-paid health insurance until they qualified for Medicare; they would receive company-paid supplemental medical insurance after turning 65; they would receive a fixed death benefit in the event of a fatal accident; and they would have a modest life-insurance policy...
Contrary to the assertions of company executives, PBGC officials and members of Congress, one company after another on the 1990 Top 50 disappeared. To be sure, many are still around. Like General Motors. That year, the PBGC reported a $1.9 billion deficit in GM's pension plans. Today, by GM's reckoning, the deficit is $10 billion. The PBGC estimates it at $31 billion. As for the pension-fund deficit, if GM or any other company can't come up with the money, the PBGC will cover retirement checks up to a fixed amount--$45,600 this year--or until...
...meantime, pension plans that companies are dumping are so short of assets that the PBGC's financial position is rapidly deteriorating. In 2000, the agency operated with a $10 billion surplus. By 2004, the surplus had turned into a $23 billion deficit. By the end of this year, the shortfall may top $30 billion. As the Government Accountability Office put it earlier this year: "PBGC's accumulated deficit is too big, and plans simply do not have enough money in the system to back up the long-term promises many employers have made to their workers...
Congress idly watched United Airlines and USAirways unload their pension obligations on the PBGC. Now Delta and Northwest are positioned to do the same. That increases the likelihood that other old-line carriers like American and Continental will be forced to do likewise. Northwest's CEO, Douglas Steenland, bluntly told the Senate Finance Committee last June, "Northwest has concluded that defined-benefit plans simply do not work for an industry that is as competitive and vulnerable from forces ranging from terrorism to international oil prices that are largely beyond its control, as is the airline industry." In that, he merely...