Jun 20, 2005
When United Airlines went bankrupt and decided to dump its pensions into the hands of the government, it suddenly turned out that the funds are short by ten billion dollars. Just two years before, the company attested to having put in as much money as required by law. What happened? A Senate committee says there are loopholes in the law regulating pensions. Yes, loopholes big enough to fly a jumbo jet through.
The law that regulates pensions was finally passed in 1974, as the result of a series of protests by workers who had lost their pensions. The law says when a pension fund doesn't have enough money to pay the pensions of current and future retirees, a company has to make extra contribution to its funds.
Nonetheless, the government's General Accounting Office found that half of the top 100 pension plans in the country were underfunded in 2002. This resulted from the fact that over the previous seven years more than 60% of these companies made no cash contributions to their pensions.
This was no "loophole." It was part and parcel of the law aimed at protecting company profits while pretending to protect pensions. In the 31 years the pension law has been in effect, this loophole could have been closed if it was only an oversight. But it wasn't.
Big companies are endlessly clever in finding ways to avoid providing for their long term workers, who they want to use up and discard. If workers' pensions are to be protected, it will be in the same way that whatever protections are in the current law got there – because workers organize to force the companies to give them their pensions.