The official blog of the Libertarian Party
November 16, 2005
Pension Benefit Guaranty Corp. Has $22.8 Billion Shortfall
The Pension Benefit Guaranty Corp.(PBGC), the federal agency that guarantees the private pensions of 44 million workers, announced in its recent annual report that it has $56.5 billion in assets to cover $79 billion in pension liabilities, thereby creating a $22.8 billion deficit.
It is feared that the current PBGC deficit will only grow larger in the years to come and trigger a taxpayer bailout. An increasing number of companies, especially those in the airline and steel industries, have transferred their pension liabilities to the PBGC. United Airlines and US Airways were able to move their employee pension liabilities to the PBGC during bankruptcy court proceedings.
The Pension Benefit Guaranty Corp. only covers defined-benefit pension plans that are prevalent in industries such as airline, automobile, and steel. The industries have experienced economic downturn as a result of increased competition and higher fuel costs. This adds to the speculation that the number of private pension plans being transferred to the PBGC will increase in the coming years. It has been estimated that traditional employer-paid pension plans are underfunded by as much as $450 billion, as reported on FoxNews.com.
Posted by at November 16, 2005 04:14 PM
Reader Comments:
Which is the untold story of this posting. Pivate pension plans have almost gone the way of the dinosaur - which is a opportunity for this party.
I'd like to see a dollar for dollar tax credit on the employer contribution into private pensions - as opposed to continuing the dependance on Social Insecurity. It would be optional of course, but which would you pick if you owned a business?
Private pension plans need to be front and center, and this party is the perfect advocator. Make it worthwhile, and companies will start up new plans - and dependance on SS will drop.
We should not try to "abolish" Social Security - we should try to make it return to it's original purpose of a old age poverty safety net instead of the massive entitlement program it is now. Marginalize it. Make it irrevelevant. Such things are easier to dispose of when there is no need for them anymore. With the right incentives into place, we could do that.
Tim, are you saying that it's the employer who would have the option to contribute to a private pension rather than to Social Security on behalf of the employee? If so, that strikes me as a flawed approach. The decision should belong to the employee, not to the employer.
It strikes me that any "plan" is more of the same. If one wishes to get rid of problems caused by government meddling, one must eliminate the government involvement altogether.
After all, why should you be asked to pick up my old age requirements after I refused to save for 40 or 50 years? Keep in mind that the union employees that are being "protected" made more money and recieved more benefits throughout their careers than than their non-union counterparts. They wanted someone else to pick up their responsibilities.
Social Security is a Ponzi scheme and the piper will be paid unless the currency is devalued through inflation to a point where the "number" of dollars" can be provided at a much lower cost.
The bottom line is that each of us is responsible for our own needs and wants. If there are those that are truely in need, there is the role of true charity. By the way, charity is where one reached into one's own procket volutarily and gives. Charity is not where government steals by force of arms someone's money and property and redistributes it.
The real retirement solution is to let the fraternal aid societies of the early 1900s come back.
Seems the intermediate answer is a system like they have in the UK (and many other "socialist" countries). You have the choice to "opt out" of the state pension, when you retire you won't get anything. In return you get a tax credit that can be used to invest in a private pension (I believe it's tax free only if invested in a pension, so people don't blow it all on warm beer).
On another note, just moved to NC (soon to go back to NH)...what is it with these ABC stores they have down here? Isn't that some sort of communist thing?
Walt,
I highly suspect that unless it's business that gets the write off, it will simply never come to pass. But maybe we can split the difference and have a half and half solution for the short term.
What has to be done is get private pensions back in vogue - the perception that private pensions are risky and can be taken away at any time is the killer. Never mind that Social Security is the ExacT SAME WAY! the public does not perceive that to be so, and even if pointed out the 100% truth that it is so, would respond in a negative manner.
It's very hard to directly confront people's strongest idealism, even when it's based on fact.
Trust me, I know. I've been doing it to libertarian's for years now. :D
How do you have a "half and half" solution, Tim?
I don't like private pensions any more than Social Security. Just the same ponzi scheme, just smaller scale. Just give the employee's the money directly and let them invest it themselves in 401k's or whatever other way they would like.
The only way it would be a ponzi scheme is if younger workers were forced to pay current or soon to be retirees. If they are paying into their own account, it's not.
Combine that with portability and you have the beginnings of something that can be sold politically. Telling everyone they can invest it itself is great, but it assumes that all people have self control over their finances.
If you knew that the Katrina people were going to spend their 2000 dollar government cards on booze, call girls, and drugs, then why would anyone who knew that have a position on giving them their retirements benifits NOW?
You cant say that when government gives people money they are irresponsible, but when you give them their retirement money as they make it they are going to be angels. Some will, some wont - and guess who is going to be at your door with some gun they stole when they want what you got becuase you were good and did what you should have done?
Ant and Grasshopper - not just a fable anymore, except now you would have clans and gangs of grasshoppers with heat. :D
But where does your "half and half" comment fit into what you're describing?
If the federal government would give back the $26,000 dollars that they took from me over the years as well as the $26,000 dollars that my employer paid into social security on my behalf, and allow me to invest that money into my IRA for the next twenty years, I could have one hell of a retirement to go along with the money that I have already saved.
This is just another piece of evidence that the airline industry in the U.S. are the the welfare queens! Taxpayers bailed them out after 9/11, funded the the TSA to pay for the security, and transferred billion to the PBGC! The worst of business executives seem to migrate to the airline industry! It's time to stop this madness. Liquidation is the answer!
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Which is the untold story of this posting. Pivate pension plans have almost gone the way of the dinosaur - which is a opportunity for this party.
I'd like to see a dollar for dollar tax credit on the employer contribution into private pensions - as opposed to continuing the dependance on Social Insecurity. It would be optional of course, but which would you pick if you owned a business?
Private pension plans need to be front and center, and this party is the perfect advocator. Make it worthwhile, and companies will start up new plans - and dependance on SS will drop.
We should not try to "abolish" Social Security - we should try to make it return to it's original purpose of a old age poverty safety net instead of the massive entitlement program it is now. Marginalize it. Make it irrevelevant. Such things are easier to dispose of when there is no need for them anymore. With the right incentives into place, we could do that.
Posted by: Timothy West at November 17, 2005 07:17 AM