Aug. 14, 2004 - 19:24 MDT

THE WONDERING JEW

Running deeper and deeper

The implications of the present attempted actions by United poise a danger to any person hoping to survive on pension promises by any company if United is successful in pulling out of the required lawful contributions to the pension plan, at least that is the way it seems to me.

An article in todays Rocky Mountain News by David Kesmodel of the same paper, in part, headlined:

UAL pension protest

"The federally sponsored agency that insures pension plans objected in a bankruptcy-court motion Friday to United Airline's move to stop pouring money into its plans for the rest of its Chapter 11 proceedings."

"The Pension Benefit Guaranty Corp., which fears increases in its liabilities, also raised its estimate of the shortfall in United's four plans, which cover pilots, mechanics, bag handlers and other workers and retirees."

"The pension agency projected the plans would have a deficit of $8.3 billion if United terminated all of them -- an action that's increasingly expected. The agency's estimate last year was $7.5 billion. The agency said it would be liable for $6.4 billion, or 77 percent of the revised deficit. That would be the biggest burden in its 33 year history. Plan participants would lose $1.9 billion in benefits."

United's pension problem is shaping up as one of the most contentious issues in the airline's nearly 80-year history, and the carrier's big labor unions are pledging to use every resource they have to protect the plans."

"The union's ally in the boiling dispute, the pension agency, objected Friday to terms in United's new $1 billion bankruptcy-loan agreement that the airline says "effectively" block it from making contributions to its plans for the duration of its bankruptcy."

"United's decision to stop funding its pension plans increases the risk of loss not only to the company's workers and retirees but to participants in other plans insured by Pension Benefit Guaranty Corp," Bradley Belt, the pension agency's executive director said in a statement. "The U.S. Bankruptcy Court should reject this attempt to 'sidestep the the statutory funding rules,' he said. Agreements between private parties must not take precedence over federal pension law."

"UAL Corp.'s United said in a statement that the loan agreement, announced last month, provides the company with 'critical liquidity' and flexibility as it strives to raise financing so it can step out of bankruptcy."

"The Chicago-based carrier has said it is weighing shedding the pensions altogether. Otherwise, it might be unable to draw exit financing because the plans would eat up huge chunks of cash flow in coming years."

"The decision to stop pension contributions, which has no immediate impact on benefits being paid to retirees, quickly raised the ire of United's unions, signaling the start of one of the ugliest chapters in the giant carrier's history."

"Besides the impact at United, some observers worry the pension agency, whose liabilities outstrip its assets by about $10 billion, could require a taxpayer bail-out if United sheds its plans, other airlines follow suit and the agency's losses mount.

"The agency collects insurance premiums from companies that sponsor pension plans so it can pay benefits when plans fail. It receives no funds from general tax revenues.

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My opinions. Seems to me that often "explanatory" articles raise more questions in my mind than they give answers. In my mind it seems that no company or agency should base their offer to help a troubled business IF said business quit paying into a lawfully mandated plan, to my mind that should be considered a criminal action. Also it seems to me that no company should consider accepting help under those terms, under threat of criminal charges being filed and pursued.

"Critical liquidity" and flexibility," seems to me to be a badly disguised reason for United to back out of a promise.

Is it a threat by United that it is considering shedding the pension plans altogether ? To my mind any employee who hired in with a promise of pension at the end of his or her working career and has ten or more years, those funds contributed by the employer should be adequate to cover pension liabilities and so should those employees be "grandfathered" into their pensions. The decision to go to work for an organization often is based on how good a pension plan is offered, that should definitely be considered by any administrative group. Pensions are usually based on years worked, the more years worked the bigger the pension check. So, I think that for every year worked an amount of money allowed should be enough to cover a person through to the end of the worker's career, including the raise in benefits due to seniority.

This is badly worded I know, but it appears to me that the Pension Guaranty Benefit Corp. is and has been underfunded for ages and guess that it has been due to pressure from corporate idols.

If the whole ball of wax drops on the shoulders of the retirees, then one way or another the retirees will have to be bailed out by the taxpayer (you and I) one way or another. If not by pension payments by PGBC then by welfare of some type or another, which will definitely have to come out of our pockets. They can't be left to starve like Dickensonian characters.

The possibility of other corporations or companies bugging out of their pension plans puts us in danger of going back to the times when only corporate biggies got pensions or if employees lower on the totem pole did get a pension, they were miserably pitiful pensions.

I have seen NO news of what United promises to do to take care of their not paying into the pensions if and when they come out of Chapter 11. Just a threat that they are "considering dropping pensions altogether.

So will it be back to the days of the S&L bailouts ?

I wonder if the still waters of our country's problems are Running Deeper And Deeper ? . . . . . . . . . . . .

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