A federal bankruptcy judge approved United AirlinesÂ’ plan to terminate its employeesÂ’ pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.
Just a sign of what is to come.
I understand the reason they can get out of their pension obligation is because they are bankrupt. Basically what the court is acknowledging is that the pension is making them uncompetitive. If the company can't become competitive, it will end up being dissolved and the pension would not get paid then either.
For the people in the pension plan it means that they will receive less of their pension, but still some money from the Pension Benefit Guaranty Corporation (PBGC.gov). I don't exactly know what the funding mechanism is, but I am sure the taxpayers pay for it. Although this will be the largest pension default so far, the really scary pension default that may be on the horizon is GM. They have 3 times as many retirees as they have employees.
Lately I am beginning to wonder if GM is not running itself into the bankruptcy to get out of the pension problems it is facing.
How do you suppose we'll all end up paying for it? i see 3 possible ways...
1. They don't insure the pensions & the retirees get nothing.
2. raise taxes to insure (pay) those pensions.
3. print up the money thus further devaluing the dollar?
or a combination of the 3???