Jul. 29, 2004 - 12:13 MDT

THE WONDERING JEW

How I Feel

From all sides it seems to me that we are being hemmed in by stupid, greedy entities. An article by David Kesmodel of the Rocky Mountain News on July 27, 2004 came up with this: (in part)

UAL loan pact blasted

Provision to halt pension payments illegal, agency says

"UAL Corp. is breaching federal laws by striking a loan pact that includes a provision effectively requiring it to stop contributing to its pension plans, a U.S.-sponsored agency said Monday."

"The plan by United Airlines' parent to skip hundreds of millions of dollars in payments due this year and next "is of great concern," said a letter to United from the Pension Benefit Guaranty Corp., which insures pension plans against default."

"United's decision increases the risk of loss to participants in United's plans and the federal pension insurance program," said Bradley Belt, the pension agency's executive director. Chicago-based United, Denver's biggest airline, secured from bankers and additional $500 million to fund operations during bankruptcy reorganization on the condition that the airline not make further pension payments during the case. U.S. Internal Revenue Service rules and the Employee Retirement Income Security Act forbid such agreements, Belt told UAL Chairman and CEO Glenn Tilton."

"Please provide a detailed expanation of how the company's business plan will enable it to meet these obligations," Belt said. "If UAL intends to terminate any of its defined benefit pension plans, the PBGC and plan participants should be made aware of that fact as soon as possible."

"The agency -- which may only be able to cover two-thirds of United's estimated $7.5 billion in pension obligations -- said it wants the issues discussed at a meeting Thursday with United." United spokeswoman Jean Medina said the carrier plans to arrange a meeting "at a mutually convenient time."

She said United thinks it "took the steps necessary to retain liquidity and flexibility" as it tries to line up financing to exit bankruptcy."

"United declined to make a $72.4 million quarterly payment to its pension plans due Juy 15. It said Friday it won't make a $404 million catch-up payment from 2003 due Sept. 15, nor a $92 million quarterly payment due Oct. 15. The airline also signaled it might terminate one or more of its four plans. The plans cover about 63,000 employees and 58,000 retirees."

"The pension agency letter won't force United to move more quickly on deciding what to do about the pensions," said Nell Hennessy, president of Fiduciary Couselors Inc., a pension consulting firm in Washington, D.C. "Any company in United's position has a very sophisticated understanding of the PBGC and the funding rules," she said. "Now by addressing (the letter) to the chairman, (the agency is) hoping to elevate it to a higher level." Even though United is not complying with regulations, the pension agency and the IRS are limited in the actions they can take because United is in bankruptcy, she said."

"Usually, the pension agency places liens on the the assets of businesses that skip required payments. But it can't do so while United is in Chapter 11, unless it gets court approval," she said. United's move to defer payments isn't unusual for a company in bankruptcy but "certainly is not a good sign" for the future of the pensions," she said. A United default would be the biggest in the pension agency's 30 year history.

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My opinions are quite a few on this subject. For one thing I feel that United's spokes-woman Jean Medina's high handed language reflects United's feelings.

The implications are tremendous.

Aren't pension funds supposed to be set aside day-to-day to take care of pensioners ? If by some hook or crook United gets by with this, what is to stop other companies and corporations from doing something similar when in financial difficulty or simulated trouble ?

These pension payments that United is not making -- what is happening to the pensioners because of non-payment by United ? ? ? Or will happen to pensioners when PBGC has payed 2 its two-thirds ? ? ? ?

United is doing or not doing something that is in essence illegal, hah -- the excuse is because they are in Chapter 11.

"Chicago based United secured from bankers an additional $500 million to fund operations during bankruptcy reorganization on the condition that the airline not make further pension payments during the case."

So even the bankers don't give a darn about pension plans or pensioners, just the almighty dollar and profits. So while this is being cussed and discussed at great length and in the courts -- what is going to happen to pensioners ?

People who have spent all their working lives, feeling secure in the fact that they are under a decent pension plan, suddenly finding themselves restricted or cut off completely from income from their pensions, have worked as long as they are able and unable to find work they can do -- especially now ---- deserve a heck of a lot better than the prospects ahead for them now.

United has demanded cuts in pay from all employees, has cut jobs and now is not making pension fund payments. What the heck next ?

If they can't' get it together under Chapter 11, especially after all the belt tightening previously -- maybe they better go into full bankruptcy and let other airlines pick over the remains. surely the other airlines will pick up many of the employees left.

Whatever, I think this like most other plans and plots MUST BE GRANDFATHERED to protect those retired or near to retirement. It is relatively easy to tell present employees that after such a date plan x or benefit 2b or provisions or pensions will be discontinued. BUT even if discontinued those who retired under the plan at the time of their retirement should be covered. At least giving those folks still working the opportunity to work extra jobs or go to jobs that are fulfilling promised benefits.

But an old, retired, pensioner goof like me feels like he is picking nits on a flea's flanks . . . . . but that's How I Feel . . . . . . . . .

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