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Subject: Pension Benefit Guaranty Corporation
Bart, you wrote:
> I don't have the details, but there's some
government entity that guarantees
> everybody's pension fund and it's missing
hundreds of billions of dollars, too.
It's the Pension Benefit Guaranty Corporation
(PBGC) created in 1974 as part of the ERISA legislation.
It provides an "insurance pool" similar to the
one the FDIC provides to "insure" bank deposits.
The ERISA law is *WHY* the United Auto Workers
pensions from GM are FULLY FUNDED.
http://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation
http://en.wikipedia.org/wiki/Employee_Retirement_Income_Security_Act
GM has NO LIABILITY for pensions owed to the United
Auto Workers, because that money
is already set aside in secured investments (U.S.
Treasury Bonds e.g). Under ERISA, GM and
other companies that offer defined benefit pensions
have to put money in escrow to cover those pensions.
http://en.wikipedia.org/wiki/Plan_termination
Defined benefit pensions are the old fashion type
where you worked for the company for 20 years
and got a gold watch & so much every month
for the rest of your life.
Where GM has unfunded pension liabilities is for
the golden parachutes promised top executives.
That's the reason GM wants to break the union
contracts, so it can raid the UAW escrow accounts
to pay executive pensions and dump the pension
costs for UAW onto the PBGC.
The Pension Benefit Guaranty Corporation was set
up to insure those defined benefit pension plans
in the event a corporation failed to fully fund
them and then went bankrupt. Any company that has
a defined benefit pension plan has to pay taxes
into the the insurance fund.
The PBGC doesn't have funding to cover all the
pensions that are being dumped on it. The "premiums"
paid into the PBGC are just like the "premiums"
paid into the FDIC; they're dumped into the general
revenue stream of the United States Government
along with your Social Security and Medicare
withholding which are technically insurance ...
taxes as premiums.
Remember the Social Security "Lock Box"?
So there's not really any money "missing"; the government got the money and used it to provide tax breaks for the ultra rich.
The real problem is that corporations are using
chapter 11 bankruptcy to avoid statutory requirements
to fully fund defined benefit pensions and to
breach contractual obligations to their union employees.
The PBGC is supposed to be the agency that covers
that default.
John S
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