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| | Corporate pension plan woes threaten American workers' retirement
Saturday, May 14, 2005 By Wesley Brown Arkansas and American blue collar workers have something else to worry about. And this time, it's not angst over rising health care premiums, jobs going overseas, the high cost of living or the constant threat of another plant closing. The constant unease about retirement, especially with the president keeping the issue before the public, is starting to bubble to the surface as more Baby Boomers head toward retirement. Nevermind the current debate on Social Security, why is no one talking about the security of the pension plans that many of America's older workers are hoping will make their retirement years more pleasant? Something should have been done by Congress a few years ago when cracks in the system were found following the Enron collapse, which resulted in employee pension plan losses of up to $1 billion. In one case, Robert Vigil, 47, testified before the U.S. Senate Committee on Commerce, Science and Transportation about the enormous cost to him, his family and co-workers. This electrical machinist for Portland General Electric, an Enron subsidiary, had given 23 years of his life to Enron before he lost his retirement and his job. Vigil told congressional lawmakers in December 2001 that when Enron stock collapsed, he lost $163,000 when his 401K plan became worthless. "Little did those of us working hard every day to help make the company successful know what was going on at the top of Enron," Vigil said. "Then, in October 2001, Enron's house of mirrors came crashing down in the largest bankruptcy in history." Vigil also said that eight of his co-workers, who had together invested 188 years with Portland General, lost $2.88 million. "You can imagine how this catastrophe has affected us. Now multiply that feeling across thousands of other homes," Vigil said during his emotional testimony. Today, not even four years after the Enron debacle, Congress and the federal government are faced with a long list of tough issues concerning the American worker. On May 10, a bankruptcy judge approved United Airlines' request to terminate its four pension plans, which cover 120,000 active and retired workers. The federal Pension Benefit Guaranty Corp., which insures workers' benefits, will take over the UAL pension plans, which are unfunded by $9.8 billion. "For employees and retirees at United Airlines, this is a rude awakening," said Christian E. Weller, senior economist at the Center for American Progress, a nonpartisan Washington, D.C.-based think tank. "For one, they can no longer earn pension benefits by continuing to work for United. More shocking, they will lose benefits that they have already earned." In United's case, Weller said $3.2 billion of promised benefits will "simply be wiped out." "That is equivalent to getting paid $30,000 a year and then having the employer ask for $10,000 back every year in the future," he said. The danger, according to Weller, is that other airlines and other American companies with rising health care and pension costs will seek aid from the federal government to bail them out. Just last year, US Airways terminated its pension plan. Delta Airlines is indicating that it may seek bankruptcy protection, CAP says, which could also lead to a termination of its pension plans. In Arkansas, some Wal-Mart critics are blaming the Bentonville retail giant for pushing many of its employees toward government assistance. Recent studies in California, Georgia, Connecticut and the Democratic staff of a U.S. House committee say that taxpayer-funded assistance programs are picking up the tab to the tune of hundreds of millions of dollars to make up for Wal-Mart's low wages, poor benefits and inadequate health care coverage. Other corporate critics are hoping General Motors and Ford Motors, whose credit ratings were recently cut to junk status, don't press the federal government to bail out those American auto giants. GM has said that its falling profits have been mainly caused by rising health care costs. Let's just hope that other poorly run corporations don't start to believe the federal government is the answer to their problems. The corporate line to the government's feeding trough would be endless by the time Congress got around to fixing the problems. ------ Wesley Brown is business editor for the Arkansas News Bureau in Little Rock. His e-mail address is wbrown@arkansasnews.com. |
