NYT: "The pensions of millions of Americans are being threatened because of trouble in a part of the retirement world long considered so safe that no one gave it a second thought."
Are we looking at another bailout in the offing? Can we afford it? Is it serious... how serious?
The pensions belong to people in multiemployer plans — big pooled investment funds with many sponsoring companies and a union. Multiemployer pensions are not only backed by federal insurance, but they also were thought to be even more secure than single-company pensions because when one company in a multiemployer pool failed, the others were required to pick up its “orphaned” retirees.The pools are "big". How big are the pools, exactly... ball park, roughly.
Today, however, the aging of the work force, the decline of unions, deregulation and two big stock crashes have taken a grievous toll on multiemployer pensions, which cover 10 million Americans. Dozens of multiemployer plans have already failed, and some giant ones are teetering — including, notably, the Teamsters’ Central States pension plan, with more than 400,000 members. (read more)It could be just big enough to be in the 'too big to fail' category. I say, by my figures, ball park, roughly.
Are we looking at another bailout in the offing? Can we afford it? Is it serious... how serious?
19 comments:
There are a lot of votes there, expect Democrats to pander. And Republicans have to tread lightly given they want these votes too.
And those poor shulbs without these cushie over leveraged pension plans? SOL.
The NYT is so funny. They write as if suddenly discovering a new hidden thing. The first sentence "...that no one gave a second thought."
orly?
Tres arrogante. They should have checked out insty for the last... since... forever.
Items all along about cities beginning to talk about thinking of starting the onset of considering the genesis of the seed of the germ of the idea about maybe initiating an onset of pondering possibly perhaps maybe sometime in the future daydreaming of increasing contributions and decreasing commitments, or not.
Too big to fail = Harry Reid?
It doesn't seem to take much these days, to reach that threshold, that home free no-matter-what comfort zone, where you are too big to fail.
I know I'm jumping around. But, if people are corporations, and the Supremes says they are, and I agree, it makes sense that corporations are people because they are made up of people.
But, that also 'may' mean, that people, in particular, like corporations can grow just big enough not to be allowed to fail.
A politician, a movie star. Obama.
Not to sound too conspiratorial, but it would explain Sharyl Attkisson
What the inestimable Chip said. In buckets.
"...no one"?
Liars! It's like the story -- sadly, probably apocryphal, yet so true in its own way -- about the film critic Pauline Kael saying she didn't know how Nixon won, because no one she knew voted for him.
Keep in mind this comes from the exact same crowd that has always said that letting people have control over their own retirement funds was risky! So risky! And it's really so much more sensible to let wiser heads handle things for them.
Meanwhile, in http://www.nytimes.com/2014/04/13/opinion/sunday/saving-young-people-from-themselves.html?hp&rref=opinion, we also have Mr. Steve Rattner (who participated in the Obama GM-bailout scam), advocating confiscating wages for compulsory "savings" . . . because, you know, ordinary Americans just can't handle these things on their own.
I kinda messed up the link thing, but you get it.
@EBL, the arithmetic of vote counts trump everything.
Not the arithmetic of trillions in debt.
... of increasing contributions and decreasing commitments, or not.
A la Scott Walker?
My goodness gracious.
Pension funds that are in trouble are pension funds that have been RAIDED. Someone, actually many someones, just couldn't keep their hands out of the cookie jar. Teamster goons robbed their "brothers?" Like that's a surprise. And everything's backstopped by "the full faith and credit" of Uncle Sam. Oh, well now we can all sleep at night...NOT!
"My goodness gracious" is my little Rumsfeld reference there.
The democrat party and the mob bosses - er, I mean, union bosses, are corrupt.
Fresh news from the board.
Perhaps the NYT could have checked with Lem's Blog.
We were all over this topic last year.
The unfunded pension liability is what is going to sink many cities and states through out the country.
What they could never explain adequately is why public safety employees get to retire after twenty years with fully vested pensions. Most cops count the days until the vest from the minute they get on the job. Why are they different from the rest of us working stiffs?
I'll have to go against the grain here since few seem to have read or understood the Times article.
It deals with a particular type of pension, multiemployer plans, and the problems they are currently experiencing. About 10 million employees and retirees are involved. One of the largest single plans is the Teamsters Central States plan.
That plan has been under federal court supervision since 1982. That happened because the crooks in the union leadership were gambling with the funds when they weren't stealing them outright. Several of those guys went to prison and a couple of others were murdered. That old style corruption isn't currently a problem.
The issue with the multiemployer plans is twofold. One, they are governed by a different set or rules than are single employer plans or public employer plans and two, the economy.
Those rules allow buyouts by employers and there is a question as to whether those buyouts are sufficient. They also allow cutbacks in or elimination of pension payouts for fully vested pensioners. Such cutbacks are not allowed under single employer plans (to the extent to which the pensions are guaranteed by the PBGC) which is what brought the widow in the article into play.
That set of issues has been on the radar for a decade or more so the Times' assertion of surprise is either uninformed or dishonest or both, take your pick.
Which brings us to problem number two, the economy, which is predominate. Multiple bankruptcies among the employers involved (Hostess, of Twinkie fame, for example), have reduced the number of active multiemployer plan contributors. The dotcom bubble burst and the 2008 fiasco put the plans in a financial position from which they have never recovered. Low interest rates, unmentioned by the Times, make recovery without undue risk in equities difficult if not impossible.
But focusing on bankruptcies or interest rates would not fit the "recovery" narrative and might reflect badly on the Obama presidency. So they dig up the widow and give us a sob story to further their predictable interest in a government bailout.
Excellent rundown.
Too big to fail is like unsinkable.
Rabel is correct. This is not at all like government pensions, and the problems aren't the same. (Incidentally, any private pension plan that used government pension plan accounting rules would end up with the people running the plan in jail. But there are actually good reasons for that.)
And I can tell you that the interest rates that Rabel mentioned are the biggest problem. Those low interest rates are bailing out the federal government and especially the big financial interests. All at the expense of savers, especially little savers. And that's what a pension plan is, in part, as well as a 'death' insurance policy.
Oh, and I can guaran-damn-tee that the plan actuaries have been aware of this problem for many years. Interest rates have been low for a long time now, and that just MURDERS expected asset growth, requiring more contributions up front from plan sponsors. These low interest rates to benefit big financial institutions have been eroding the economic viability of many businesses, and this is just one of the ways that happens.
Full disclosure: I was an actuarial analyst in a former life. Think of it as an EA/FSA in training, but I did that long enough to learn the important basics, and then spent several years analyzing pension costs (among other things) for one of the five most recognizable companies on the planet.
What? You mean common core math can't save us? Shocking.
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