(GM and Chrysler) Retiree pensions are at risk

[Bozita]

Source: Detroit News

Wednesday, April 15, 2009
Retiree pensions are at risk
Fed insurer fears auto failures
David Shepardson / Detroit News Washington Bureau


Washington -- General Motors Corp. and Chrysler LLC retirees and employees could lose $23 billion in pension benefits if the companies terminate their retirement plans in bankruptcy, the government's pension insurance agency warned Tuesday.

Neither GM nor Chrysler plans to file for bankruptcy, but both are taking steps to prepare in case they are forced to do so in the coming weeks. While neither has said it plans to terminate its pension program, struggling steel companies and airlines have used bankruptcy to get out from under large pension obligations and turn them over to the government.

GM and Chrysler combined provide pension benefits to about 630,000 retirees and dependents, and cover another 300,000 who haven't begun drawing benefits.

The Pension Benefit Guaranty Corp. (PBGC) insures the pensions of 44 million Americans, including 1.5 million in Michigan. Its representatives have met repeatedly with the Obama auto task force on the impact of a GM or Chrysler pension plan termination, and have been making preparations for the possibility.

PBGC acting director Vince Snowbarger said Tuesday that termination of either pension plan would have a major impact on retirees.

Read more: http://www.detnews.com/article/20090415/AUTO01/904150364/Retiree+pensions+are+at+risk

[havocmom]

1. The rewards of bad management are not just big salary, bonuses, golden parachutes

there is always the chance you can do so badly that you can also stiff the workers who gave their productive years to the corporation.

[Captain Hilts]

2. Get in line. This has already happenend in the coal industry. nt

[xchrom]

3. recommend

[madmom]

4. Question about the Pension Benefit Guaranty Corp. If these pensions are

turned over to PBGC, do the retirees get their full pension or only a percentage of it? In other words does the PBGC only "guarantee" a percentage of the pension? I'm curious as to how it works. Thanks in advance for any answer.

[BonnieJW]

5. A percentage.

[sarcasmo]

6. My Dad who is a GM retiree says they are guaranteed a percentage by the PBGC.

I have the formula saved some where I just need to find where. I found the formula when the economy tank and GM Bankruptcy talked started.

[Kolesar]

7. The highest -paid retirees will have their pensions cut greatly

...because the PBGC will set a cap for the highest pension level to be paid to anybody.

Here's some of it http://www.slate.com/id/2119327/

[Oregone]

8. Here is an interesting take from neighbors to the north:

http://www.financialpost.com/news-sectors/story.html?id=1485748

"That's because of a difference in Canadian labour and insolvency law. In the United States, insolvencies can be used to end high-cost union contracts if certain procedures are followed. In Canada, however, such contracts survive insolvency and extend to successor employers who emerge from the ashes of a defunct company. A union collective bargaining agreement can also apply to an unsuspecting company that simply buys equipment, even if it's moved to a different location and possibly even if it's used for different purposes."

You know, this is essentially one big organized cram-down. Too bad the US doesn't have laws like in Canada that protects legacy agreements even in bankruptcy and beyond. I guess there is a reason: the companies are the ones writing the laws.

But then again, it makes you wonder why any company does business in Canada at all. When you look at the big picture, and things like this, the long term cost of labor couldn't be higher due to the company's inability to fuck people so much.

[kayla9170]

9. What Happens to Their Health Care Benefits

I am so glad that after 41 years as a Toolmaker at General Motors, he is not here anymore to see so many people looking forward to the downfall of this company. My father passed away from Cancer, rather quickly, over a two month period. I saw my Dad final bill for his treatment....$150,000!!! As a taxpayer, I do not want this liability from other retiree's that have EARNED their health care for life, on my back and my children's back. I wish people will start looking at more than just the pension as the health care is equality important!!

Monica

[2Design]

10. if we had national health care and other safety values this would not

be the case - other countries care about their citizens - canada, france, etc