Pensions Shrinking

Oct 25, 2004

United Airlines, in bankruptcy proceedings, recently stopped making contributions to its pension plans, and announced it will likely soon terminate them altogether. US Airways, which just declared bankruptcy for the second time in two years, has suspended contributions to its pension plans covering 15,000 workers. Delta Airlines has stated it may have to declare "bankruptcy" soon, too, and possibly terminate its pension plans.

The junking of pension plans has become commonplace in the last few years. Big steel company pension plans have been junked–at Bethlehem, National, LTV Steel, Weirton, Great Lakes Steel and Rouge Steel. Thousands of Enron workers were left with no pensions. And recently a bankruptcy judge allowed Kaiser Aluminum Company to terminate its main pension plan, leaving 20,000 hourly and salaried employees with no company pensions.

Corporations in bankruptcy can continue doing business, paying their bankers, suppliers and executives and their stockholders. The things they rush to junk are obligations to their work force.

Their pension plans get dumped on the government-backed Pension Benefit Guarantee Corporation (PBGC), which cuts some pensions and eliminates retiree health care benefits for everyone.

Because of all the depleted pension plans from "bankrupt" companies that have been thrown on the PBGC, this agency is now running a deficit of about 10 billion dollars, a deficit which is expected to rise to 20 or 30 billion dollars as a result of these games the bosses play. In addition, Congress recently passed a law that will allow companies to underfund their pension fund contributions even more than they do now.

In fact, despite what we’ve been led to believe, private pensions have never really been "guaranteed." They will be protected not by courts or politicians but by the same means that established them originally: a struggle of workers which forces the bosses to come up with the billions they’ve stashed away out of sight!