Employee
pension plans have unsustainable unfunded liabilities. The vast majority of pension plan
participants are government employees.
When cities and counties go bankrupt, these pension benefits are in
jeopardy.
Defined
Benefit Pension Plans have nowhere to go to earn money on their money. Interest rates are zero and the stock market
is unstable. These plans need to be
converted to defined contribution plans.
I
terminated the pension plan at Electromagnetic Sciences, Inc. in 1993. The company was over 20 years old and had
over 1000 employees. The PBGC rate was
particularly high at the time, so we could get a good lump sum amount for participants. At the time it was not underfunded. We had
always contributed 5% of payroll to the pension plan and we chose to continue
that to fund an “age weighted plan” to protect those close to retirement. We had earlier adopted a 401K plan.
We
allowed employees to take a taxable lump sum distribution of their pension plan
payout or have it transferred to the age weighted or 401k plan. This change
allowed the company to avoid the trouble we anticipated by continuing the
pension plan. Most private and public
companies terminated their pension plans in various ways.
Those who
did not terminate their pension plans at that time included utilities and many
fortune 100 companies. Government
employee pension plans were generally continued even to today. The government and utility employees who
still have pension plans need to know that our current investment environment
will destroy their pension plans.
Norb
Leahy, Dunwoody GA Tea Party Leader
No comments:
Post a Comment