Great post over at Ankle-biting Pundits about how “United Airlines bankruptcy offers preview of Social Security”. Under the bankruptcy agreement, pension benefits will be cut by 25% for UAL retirees:
"It's a hammer blow to thousands of retirees who will have to somehow make do with lower pension checks. The promises United made to them are worthless," said Joseph Tiberi, a spokesman for the International Association of Machinists and Aerospace Workers.Indeed, except that defined benefit program is currently estimated to see 27% benefit cuts, rising eventually to 35% below the *cough* “guaranteed” benefit.
Exactly, Mr. Tiberi. Those promises are worthless, mainly because there's no money with which to pay them. Reminds me of another large scale retirement program.
1 comment:
The biggest difference is that this is a corporation that specified the benefit amounts in contracts. Depending on the different union contracts, amounts of employee contribution varied, but the end benefit was supposedly guaranteed. The court let a corporation void a contract because they were balancing the harm that would be caused by allowing the company go bankrupt against the harm to be suffered by individual retirees.
Now, whose fault was it? Was it the various corporate management teams, the unions, the employees for not having a more diversified retirement portfolio (and backing the unions), or some combination?
I'll choose the combination with the balance of fault laid at the unions doorstep. Management certainly screwed the pooch on this one too, though.
Blair
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