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Should Taxpayers be responsible for Private Pensions?

Discussion in 'Political Discussion' started by PatriotsReign, Feb 3, 2012.

  1. PatriotsReign

    PatriotsReign Rookie

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    Now we're supposed to bail pensions of people who worked for private companies? I don't think so Mr President...no way!

    Will Taxpayers Be On The Hook For American Airlines' Pensions?

    "American Airlines filed for bankruptcy in November. The company needs $18.5 billion to cover its pension promises to current and former employees, but it has only set aside $8.3 billion.

    Taxpayers could wind up on the hook for billions. Here's why"


    Will Taxpayers Be On The Hook For American Airlines' Pensions? : Planet Money : NPR

    Can I get my 401K bailed out if it tanks?

    The kicker is that we have a national pension insurance program that's supposed to cover these issues, but the fund is running out of money. So instead of charging a higher fee to businesses, they think taxpayers will cover the shortfall.

    Since it was the airline employee unions that negotiated this contract, the unions should pay for it!

    Again...I don't think so Mr President!
    Last edited: Feb 3, 2012
  2. Drewski

    Drewski Rookie

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    No Jersey Selected

    Sounds like a horrible idea. AA should just sell some of their fleet to make up the short fall. However $10B would be tough to come by on their aging fleet.

    Please to all things holy, enough with protecting failed business' (aside from the auto industry as it was a unique case where that one industry touched so many others)
  3. Mrs.PatsFanInVa

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    #11 Jersey

    Why are you yelling at the president, PR? Do you not read your own articles?

    Here, let me help. Pay particular attention to the red bolded parts.

    President Obama has proposed raising the premiums companies pay to PBGC, to make up the shortfall. But big business groups oppose any increase.

    Why are you mouthing off at Obama, who agrees with you and not saying a word about "big business" who is opposing it?


  4. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    I have a friend who is retired from United Airlines and his pension was guaranteed by the Pension Benefit Guarantee Corporation, a government agency.

    Welcome to PBGC
  5. Mrs.PatsFanInVa

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    #11 Jersey

    By the way, who is your mythical "they?"

    The head of the PBGC says, clearly, that he expects AA to cover it themselves or to do a much better job of proving that they can't before PBGC will even think of picking them up under their insurance program.

    Outside of one little "teaser" scare line, there's nothing about taxpayer money going anywhere, is there?

    If you're really interested in what's happening with AA...and how Bain is involved, watch this:


    The Last Word
  6. PatriotsReign

    PatriotsReign Rookie

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    I included that in my original post Darryl. The problem is, the PBGC is currently under-funded due to high pension defaults. It is a self-funded insurance for private pensions and is paid for by businesses.

    But what the article cites is that businesses are refusing to pay an increase in fees so the shortfall may have to covered by tax payers...and that's wrong.
    Last edited: Feb 3, 2012
  7. PatriotsReign

    PatriotsReign Rookie

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    So why didn't the president tell them they don't have a choice?

    "Mouthing off"??? Is that what you call my comments? I do have the right to question any public employee...that is what Mr Obama is by any account.

    I am calling this to his attention because he's the one who can put a stop to the insanity of asking tax payers to cover the shortfall of a private pension system.

    It's not our problem MrsP...it's their's.


    No, the UNION negotiated their contract with AA...nothing to do with tax payers, is it?

    I say let them battle it out and keep tax payers out it.


    Not really...

    And I'm refusing to give my tax dollars to help with a private pension! Simple concept really.

    Again...tell businesses they have no choice but to pay a higher premium.

    Do you personally believe that under-funded PRIVATE-SECTOR pensions are taxpayers responsibility?
    Last edited: Feb 3, 2012
  8. Mrs.PatsFanInVa

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    #11 Jersey

    I, personally, believe that since AA has enough money to pay Bain millions of dollars a month to figure out ways around paying their own pensions that they are capable of firing Bain and paying their own pensions, or, barring that, that the president is doing the right thing by saying that the businesses who insure their pensions through the PBGC can start paying higher premiums,thus covering themselves as well as their brothers-in-big-business. I, personally, believe that if a company has money overseas or elsewhere they should be required to use that money to fullfill their past obligations and not to finance their new ventures. I, personally, believe that the bankruptcy laws for big businesses need serious changing.

    I, personally, believe that acting like Chicken-Little, posting that there's a taxpayer expense bail-out in the works when, for all the information you've provided, there is not, is dishonest fear-mongering.
  9. PatriotsReign

    PatriotsReign Rookie

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    I only posted an article from NPR so how is that fear-mongering on my part?

    I'm glad you're against any tax-payer support for these people as am I. Nice that we agree now & then.
  10. Real World

    Real World Moderator Staff Member

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    Nope.

    12345
  11. PatriotsReign

    PatriotsReign Rookie

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    Whomever that model is on your sig, do you have her number? I just know she'd dig me if we met!:D
  12. Real World

    Real World Moderator Staff Member

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    Her name is Irina Shayk. Possibly the hottest piece of female flesh on the planet. Certainly not someone I would kick out of bed in the morning. ;)
  13. The Brandon Five

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    #75 Jersey

    Does PBGC cover in cases of underfunding? That creates a moral hazard whereby companies deliberately fail to fund their pensions at an adequate level and then get bailed out. Corporate welfare fail.
  14. PatriotsReign

    PatriotsReign Rookie

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    Nice to see you stop by B5!!!
  15. PatsFanInVa

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    From the looks of things, PBGC only takes over pension plans that are underfunded (click the link and look at "standard termination"). If a pension plan is healthy, they just check that paperwork is in order when the company uses that full funding to buy annuities for its people to pay them what they owe them.

    Here's the fact sheet on how PBGC ends up w/pension plans -
    Plan Termination Fact Sheet

    Think about it this way, B5 - a "pension plan" is a big pile of stuff you own and stuff you owe. When a plan goes belly-up, the PBGC gets the liabilities, but also the pension plan's assets. While assets are lower than liabilities (or the PBGC wouldn't be getting involved,) the assets are sometimes in the billions of dollars, and exist right now.

    In addition, PBGC goes after underfunding liability, at least in some circumstances, out of the company's own assets (not the plan assets):

    PBGC preps for possible AMR pension takeover with liens | Business Insurance

    The thing is, the "required pension contribution" isn't the amount "required" to get the plan to be 100% funded, where they can buy everybody an annuity that provides the people in the plan with the benefit they've earned. It's the amount "required" not the amount it takes to be fully funded.
    Last edited: Feb 4, 2012
  16. The Brandon Five

    The Brandon Five Rookie

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    #75 Jersey

    I'm back to more enjoyable topics like death, taxes and the potential end of civilization now that football season is over...:bricks:
    Last edited: Feb 6, 2012
  17. Mrs.PatsFanInVa

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    #11 Jersey

    Welcome back.
  18. The Brandon Five

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    #75 Jersey

    I was thinking more about the premiums that are collected by the PBGC from the participating plans.

    How PBGC Operates
    It would be interesting to see how premiums are calculated. If they are not linked to the risk of plan failure (i.e. underfunding) then I think we have an issue.

    I did a paper in graduate school on the funny math used in association with pension plans whereby the "assumed rate of return" was applied to the funds in the pension plan and used as an additional source of earnings (nevermind whether the fund actually earned any return at all). GE was fond of this IIRC.

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