Ruckus in House session as
Pension crisis grows worse
By G. Dunkel
It may have been only a spat between
Republicans and Democrats when, on July 18, House Republican
leaders on the committee handling pension reform called in the
cops after Democrats walked out in protest over Republican
changes to new legislation. But it was no charade. Hundreds of
billions of dollars are at stake.
Not that the Democrats went to the mat to protect workers'
interests. They just wanted to prevent the Republicans from
ramming through a bill that would damage their allies in the
business world.
The major issue is a change in the law and regulations
concerning private pensions. A Democratic bill would have
forced the 32,300 companies offering traditional pensions to
set aside $200 billion over the next 10 years. A Republican
substitute bill reduced that to $48 billion.
Watson Wyatt Corp. estimates that 63 percent of these
traditional plans don't have enough money to meet their
obligations to workers.
Basically, the companies, having made lots of profit off
these workers over the years, have used the workers' pension
money for other things. They have invested some of it on the
stock market, and had losses. They have used some of it to
expand in order to knock out their competition, only to find
that everyone else expanded too, and now they've outgrown the
market. This is typical of capitalist firms in a period of
boom, and leads directly to recession.
Now they don't want to dip into other funds to meet their
obligations to retired workers. Companies in some industries,
like the airlines, which have $22 billion in unfunded pension
obligations, say they might go under or out of business if they
have to make these payments. The companies are even resisting
calls to provide more timely information to their covered
employees.
The Pension Benefit Guaranty Corp. is a federal agency that
insures the pension plans of 44 million workers and retirees.
When a company can't meet its pension obligations, the PBGC is
supposed to step in. It reported in 2002 "a net loss of $11.4
billion, the largest in the pension-insurer's 28-year history"
(Wall Street Journal, Jan. 31), and blamed much of the losses
on bankrupt steel companies. The workers in Bethlehem Steel's
pension plan also suffered a severe loss when Bethlehem went
bankrupt and PBGC took over pension payments. They got far less
than they were entitled to.
The PBGC estimates that today company pension plans are
"underfunded" to the tune of $300 billion; as recently as 1999
that figure was only $23 billion.
A pension is not a gift from an employer to reward faithful
service. It is salary retained by the boss that is supposed to
provide income for workers when they cannot or no longer want
to work. In many countries, all pensions are publicly
guaranteed and administered, but not here.
In the United States, the government plan paid to almost all
workers is Social Security, but for many workers it doesn't
cover even basic expenses. Many workers rely on private
pensions to provide the bulk of retirement income as well as
significant medical benefits.
Workers have earned their pensions and have a right to them.
Bosses should not be able to play financial games with the
connivance and agreement of the government.
A real reform would not only force companies to pay what
they've promised--it would force them to pay a fair pension
that reflected the true value of what the workers produced for
the company and would guarantee that every worker can retire in
comfort and dignity.
Reprinted from the July 31, 2003, issue of
Workers World newspaper
This article is copyright under a Creative
Commons License.
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