Comments on: The Pension Destabilization Act

By: vperry

vperry — Tue, 14 Aug 2012 16:17:10 +0000

Where were the people when Clinton, Rubin, Reich and Larry Summers agreed to rob the pension funds back in the early 1990s? Now we see the result of that. CEOs convinced our politicians that we needed to rebuild infrastructure and use that sitting pension money just for that. Well, the infrastructure did not happen and you can imagine where all that money ended up. Transfer of wealth started a long time ago and you still think we have two parties!

By: TOTL

TOTL — Tue, 14 Aug 2012 15:01:17 +0000

So the result is to make privately run pensions less solvent and put more money in the federal government run PBGC? Any guarantee that the money going in there stays there, or is it just a pile of IOU’s like the SS fund?
Just another case of federalizing everything. George Orwell would be proud!

By: krimsonpage

krimsonpage — Tue, 14 Aug 2012 14:11:32 +0000

Yes, but what would John Galt….er, Paul Ryan do?

That’s the real question.

@gordo53 The only thing broke is your courage. If we are so broke, why are so many rich people living it up right now? They got their pensions funded just fine. And even more so now since they dont have to contribute to yours at all anymore. Wait, you probably dont even have a pension, do you? Oh, sorry.

By: gordo53

gordo53 — Tue, 14 Aug 2012 08:40:43 +0000

This should not be news to anyone. The same thing is happening in the public sector. We are broke. Simple as that. It is the end of the debt supercycle or the debt bubble or whatever you want to call it. The entire world is sliding into what will most likely be a long and unpleasant economic contraction. This is just the beginning of the difficulty, not the end. Events on the horizon include a european economic collapse and war with Iran. Buckle up my friends. It’s going to be a rough ride.

By: SeaStar1

SeaStar1 — Tue, 14 Aug 2012 05:43:30 +0000

We will fix this when it hurts bad enough. Until then we will just continue to put band aids on it until it is so infected that we have to go to the Dr. And, if we wait to long, the doc may have to amputate something important, like our some of what’s left of our freedoms.
Whatch your politician people and hold them accountable for making good financial decisions or pay the price later.
Best to all,
g

By: djt04

djt04 — Tue, 14 Aug 2012 00:29:54 +0000

I give about 10-15 more years of this Corpocracy we have for a government until we look like the Russian modeled society. It’s not the money we spend it’s the priorities that we spend it on and who benefits from the policy our government creates. Until people inform themselves of the corporate malfeasance that exists and votes accordingly we will continue to be squeezed to financial dust.

By: Missinginaction

Missinginaction — Tue, 14 Aug 2012 00:20:35 +0000

Thank you for writing this. I think I’ll go and listen to that old Genesis tune, Land of Confusion.

Now did you read the news today
They say the dangers gone away
But I can see the fires still alight
There burning into the night.

By: ConcernedCynic

ConcernedCynic — Mon, 13 Aug 2012 22:58:45 +0000

I agree that this change in the regulation of private pension plans should have been decoupled from Moving Ahead, if only to be voted on separately.

That said, this story omits the following facts.

1. This story only concerns private employer defined benefit pensions plans. All such plans are pre-ERISA (1974) legacies. All corporate pension plans begun since then are 401ks or the like, for which this law is completely irrelevant. By 2030, corporate defined benefit plans will be but a memory.

2. Pension contributions are tax deductible, meaning that $1 of contributions costs the stockholders only 65 cents… if the firm is making a profit. If the firm is not making a profit, and is unsure of making a profit any time soon, then there are no tax benefits to pension contributions, unless one gets lucky with tax loss carryforwards. The tax benefits of pension contributions should be a refundable tax credit, not a deduction.

3. It is easy and low cost for an employer to “dump” on the PBGC its current and future pensioners under its defined benefit plan. Privately, the President and the Congress expect this to happen in many cases. The resulting taxpayer cost? We’ll cross that bridge when we come to it… I am surprised that the PBGC, created by ERISA 40 years ago, has not yet required a bailout.

4. The issues discussing in the article are third order compared to the looming insolvency of half or more of state & local govt. defined benefit plans. I agree with Joshuah Rauh when he argues that the unfunded liabilities of such plans are on the order of US$4.5 trillion. Under current law, these pension liabilities cannot be dumped on the PBGC.

5. The only pension plan that can be fully trusted is an IRA invested partly in bonds, and partly in a stock index fund. The IRA contribution limit should be raised to $10K/person/year.

By: running

running — Mon, 13 Aug 2012 22:27:20 +0000

this law was made for companies like GM’ & FORD’ Salaried employees pensions were under the protection of the federally insured PBGC, the fund is in the hands of Prudential, Prudential calls it an annuity, but there is no inflation protection, no cost of living increases, theres probably also a very large management fee for maintaining the funds’ distribution, if these retirees do not accept the lump-sum buy out, theres really not alot of pension guarantee from Prudential. Washingtons’ law was created to to stabilize or destabilize a deficient, nothing else

By: running

running — Mon, 13 Aug 2012 22:26:26 +0000