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

To: TimF who wrote (575)	6/9/2005 2:21:35 PM
From: Rambi	Read Replies (2) \| Respond to of 541429

American Airlines wrote an interesting letter to the Finance Committee regarding the hearings on pensions the committee is now holding. AMR is trying to save their fund and are concerned they will be handicapped by actions that penalize that. Excerpt: While the media has focused almost exclusively on the crisis precipitated >by airlines abandoning or freezing pension plans, American and its >employees are following a different path. We are, together, working hard >to maintain our defined benefit pension plans. We urge the Committee to >enact legislation that would give us the chance to do so. > >To be clear, we understand the desire other companies have for legislation >that allows companies, through the collective bargaining process, to >freeze defined benefit plans and convert to other types of plans. This is >a useful tool to have if necessary to prevent more drastic results. But >we need legislation that does not require us to freeze our pension plans. We fear that in the midst of concern about the potential default of >airline plans, Congress will take actions that would inadvertently cause >our plans to become just as vulnerable as those currently in trouble. In >particular, any legislation that would place greater funding burdens on >companies with "below investment grade" credit ratings could have the >perverse effect of forcing us to abandon our plans.

To: TimF who wrote (575)	6/10/2005 10:59:29 AM
From: richardred	Read Replies (1) \| Respond to of 541429

>To an extent that is happening anyway. Yes it is >Would you urge companies to move faster in this direction or would it be some form of requirement? -No -IMO it should be the competitiveness of the plan that should attract good employees when their looking for a job. Smaller companies need to do it on their own merit, not be forced. They will loose good employees to companies who offer better benefits if they just stand still. >What about companies that don't have pension plans (or who get rid of them) and only make a small (or 0) contribution to employees 401K plans? I'd say they would be at risk in loosing employees. Remember a 401K plan for employees can also be used like a free agent in football. If company matched, once vested, you can take your plan with you (rollover into another qualified plan). If unmatched you can take your contributions with you whenever. Also, Those employees also have the option of setting up a IRA for themselves and deducting it within IRS guidelines. >Change the rules on pension funding while also increasing the premiums for federal insurance of pensions. Eventually you probably phase out the insurance. I'm not familiar with federal pension plans, but as far as private sector plans. I think the future trend might be for employer self insured plans. The company does bear the risk, but employees do care about cost and service. I know Xerox went to self insured. Our company is self insured for dental.