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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (468)	6/7/2005 3:11:27 AM
From: Peter Dierks	Read Replies (1) \| Respond to of 541430

The scam just pulled by United is an abuse of the pension guarantee system. Most private pensions are required under FASB rules to be funded up to the known amount of the liability. The target is to be fully funded. Current rules can be abused,, and were abused during the bubble. The economy was booming, so investments in the pension fund boomed, and contributions required were minimal. The bottom line soared due to the low pension contributions made by publicly traded companies to their defined benefits plans. This fueled the bubble more. Then, someone pricked the bubble. (If Social Security were subject to the same rules, it would be declared bankrupt.) Actually, the pensions are generally relatively immune from bankruptcy if I understand correctly. The pension fund is not an asset of the company per se. After 9/11, special rules were passed by Congress to give companies time to get back to fully funded. Many pensions today are still not compliant with accounting standards of solvency. If companies had prudently kept contributing as if there was no bubble, the "crisis" might have been much smaller.

To: Dale Baker who wrote (468)	6/7/2005 10:45:44 AM
From: Rambi	Read Replies (3) \| Respond to of 541430

In addition to the stress being placed on the the Pension Guarantee Fund-- which will be in huge trouble if the airlines continue to default and is already operating at a loss because of the steel industry-- allowing these failing companies to default and continue to operate gives a huge and unfair competitive advantage to the failing company over those who are still contributing to their funds and trying to do the responsible and right thing. It will set up a domino effect that will spread throughout an industry.