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Automotive News & Views United Automobile Workers of America (UAW)
16705 messages, Last post on Nov 25, 2009 at 6:56 PM
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Replying to: lokki (Jun 24, 2009 2:26 pm) What I do know is PBGC will only pay a maximum $54,000 for those that retired at age 65. That would be in the event that the Pension trust becomes under funded and the company can no longer kick in the amount needed to get it back up to the required amount. I would think that the GM Pension trust may go into default if the Feds do not add the needed amount. As of the end of 2007 the GM Pension plan was in good shape. Anyone know where it sits today? June 2 (Bloomberg) -- Did pension debts ruin General Motors? With each new labor contract, GM management found it easier to grant sweeter future benefits than to raise current wages. Over time, benefits went up much more quickly. That left GM with a daunting unfunded health-care obligation. As retirees lived longer -- one died in 2006 at age 111 -- and the cost of providing health care mushroomed, the expense grew beyond anything imagined in 1949. GM stayed current on pensions, but the money it funneled into retirement plans left less for engineering and restyling. And shareholder dividends? Forget ‘em. Over a 15-year stretch, GM plowed $55 billion into pensions and only $13 billion into dividends. That’s why I said the shareholders had been disenfranchised. Eventually, when the competitive landscape turned, GM fell behind on pensions too. By 2002, GM’s pension fund was $20 billion under-funded. It borrowed to make the pension fund whole, but that merely transferred the problem to the balance sheet. GM tried to unload some of its retiree obligations by spinning off its auto-parts business, Delphi Corp. But Delphi preceded it into bankruptcy, and GM’s continuing obligation to the Delphi workers was another factor leading to its demise. The Pension Benefit Guaranty Corp., the federal agency that may have to bail out GM workers, is now $33.5 billion in the red. Many more private pension failures loom. http://www.bloomberg.com/apps/news?pid=20601039&sid=aFJd7ViPkXQg
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Replying to: gagrice (Jun 24, 2009 3:03 pm) According to the filing, GM's combined U.S. pension assets plunged to $84.2 billion as of Dec. 31, from $104.1 billion at the end of 2007. As a result, funding levels for the two plans dropped to 87%, down from 124% a year earlier. GM's hourly plan's funding level fell to 83% as of Dec. 31, from 120% a year earlier. Its assets fell 20.4% in 2008 to $55.5 billion. GM's salaried plan's funding level fell to 95% from 132%, and its assets fell 16.1% to $28.7 billion in the same period. http://www.pionline.com/article/20090223/PRINTSUB/302239949 They are in better shape than many pension funds of major corporations. It is not just the UAW retirees that may be impacted. Even the richest sports league in the world can't meet its pension obligations. NFL owners in March voted to allow teams to opt out of the league-run pension plan for coaches and other non-playing employees. Already nine of the NFL's 32 clubs have opted out of the program — including the Dallas Cowboys and the San Francisco 49ers — and three more teams are considering following suit, said Larry Keenan, executive director of the NFL Coaches Association. The move has angered coaches, and led to worries some NFL coaches and employees might leave the league. Last month, two veteran Indianapolis Colts coaches, offensive coordinator Tom Moore and offensive line coach Howard Mudd, retired because of the pension changes |
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Replying to: cooterbfd (Jun 24, 2009 1:00 pm) Inflated profits lead inevitably to higher taxes. It would make just as much sense for a company to make the required payments, which are a deductible business expense, & thus reduce reportable income. But what companies (the profitable ones, in any case) have been doing since the 1980s is to eliminate their pension plans altogether. This is perfectly legal, as long as the companies live up to their contractual obligations to all vested employees. For example, my employer, a Fortune 500 corporation, eliminated its pension plan in 1985. It used the funds in the plan to purchase annuity contracts for all vested employees. All new hires, as well as employees who weren't vested, were offered a 401(k) plan & a defined contribution retirement plan funded by the company. You're most likely to see this when stock prices are high. If the value of a pension plan's holdings exceeds what the company needs to satisfy its obligations, that company has a powerful incentive to shut down the plan & keep the surplus. For example, if a pension plan holds stock worth $500 million but the company needs only $400 million to satisfy the plan's obligations, it makes sense to terminate the plan, spend that $400 million on annuity contracts & book the remaining surplus as a profit. Many companies did that during the bull markets of the 1980s & 1990s, which explains why so few companies still offer old-fashioned pensions today. It's also worth noting that none of the newer corporations, like Apple, Microsoft or Intel, offer traditional pension plans. I wonder how many, if any, companies have started defined benefit pension plans since 1965.
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Replying to: lokki (Jun 24, 2009 11:21 am) In the old days, you would often rise up the ladder as you stayed in a company...it does not seem like that is true, to some extent...if companies looking to fill positions look outside the company, then it seems likely that people will rise to their highest limit in Company 1, then market their skills for a riase in Company 2... The old system of loyalty does not seem to exist like it used to...both ways, employee to employer and employer to employee...since fols can be laid off in a moments motice, why should they stay loyal to a company that may dump them any minute???...how many articles have you read in Time, Newsweek, US News where the writer claims that the averge person will work for 5-8 employers in their working career???...If someone gets $30K now, and a competitor offers $42,500, why not jump ship???...we see pensions failing, so why stay with one company forever???...take your 401K and go anywhere you want... It would seem that only the unmotivated would now stay in a company for 40-plus years...right up the alley of the average UAW worker, who has no marketable skills and, rest assured, there are NOT any employers lining up to hire any displaced UAW worker...even Roger Penske wanted ALL of Saturn except what???...the manufacturing facilities...why???...because he knows who works at the plant, and he is running from the UAW at the speed of light, because he knows what we know...they aren't worth a plugged nickel when it comes to work ethic and work performance... |
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Replying to: cooterbfd (Jun 24, 2009 1:17 pm) For most politicians, I'll bet thats true, but for run of the mill grunt government retirees, theres no golden benefits. I shouldnt have spouted off about the UAW, since I dont know the facts.
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Replying to: imidazol97 (Jun 24, 2009 7:39 am)
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Replying to: wesleyg (Jun 25, 2009 4:06 am) SS penalizes those who worked two jobs because they must be double-dipping in the retirements. How SS misses most abuse of the systems but it made legislators feel better two decades ago to cut back SS payouts if someone had another retirement--cut, not eliminated if I understand correctly. But UAW people collect both and I assume they are not penalized by having a high payout from UAW in retirement when it's added to the SS along with the full healthcare and everything care they used to enjoy. |
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Replying to: imidazol97 (Jun 24, 2009 7:35 am) And the school system is supported by property taxes and is partially why a $400k house in Illinois can have $10k/yr in property taxes depending on the area. My house probably lost $50k in value last year, yet my property tax assessment still went up almost $1k/yr. Sales taxes went up 1% and now the state wants to increase income tax from 3% to 5%. It's getting a bit excessive IMO. |
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Replying to: imidazol97 (Jun 25, 2009 4:23 am) Actually I believe the GM Pension fund does take back some of the retirement when a retiree takes SS. The reason being, that GM paid half of the SS premium during the employment. It is a negotiated part of the retirement. The real problem was and is, that GM agreed to an open ended health care plan for the life of the retiree and spouse. When they signed the contract it may have cost GM $200 per month for the gold plated health care plan. Now it is probably more like $800 per month or even more. Our Teamster plan was barely copper plated and costing our company $1200 per month. Even at $1200 per month our plan is in financial difficulty because the cost of services are escalating.
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Replying to: michaell (Jun 24, 2009 9:29 am) It's something like that here in Maryland also. The problem with it, from a funding standpoint, is that it's based on the average of your highest 3 years salary. As you said, up to 80% of that highest average, which a pretty darn good deal no matter how you slice it. Way over what most workers in private industry can expect. Federal workers in the old system had it just as good. I'll repeat my story again about our friend who retired from the feds after 40 years. After a couple of years of COLA's, he's bringing home more now in retirement than he made while he was working. Courtesy of the US taxpayers.
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