Teamsters Local 707 goes
Bankrupt, by Martin Armstrong, 3/1/17
The Pension Crisis on the
horizon is far worse than anyone can imagine. This is the final straw that will
break the back of socialism the same as communism fell. Pensions are in a state
of crisis for they lost money in stock in the 2007-2009 crash and then sold the
bottom shifting to government bonds and then interest rates plummeted when they
needed 8% to survive. The management skills have been nonexistent for the propaganda
has always been that government bonds present no risk when in fact they are
UNSECURED DEBT and the riskiest of all investments long-term.
Yellow Roadway Company is
one example of how things have changed. The company was allowed to skip its
pension contributions for 18 months. When the company restarted paying again,
it was at 25% of the previous rate.
The Pension Fund for local
707 began to implode, with roughly 700 workers paying into a fund supporting
more than 4,000 retirees. Local 707’s fund pays out $48 million a year and
takes in $7.5 million in contributions. Those who have been contributing will
get nothing at all for the contributions. The whole thing is a house of cards
that caves in.
We wrote in the Pension
Report: “As we approach 2017, everything you once thought was secure for your
future will unravel.” Indeed, the Sovereign Debt Crisis and the Pension Crisis
start to surface here in 2017.
The Pension Crisis
Historically, families and
marriage provided the security needed to support the elderly prior to the
proliferation of pensions. As the population became more industrialized,
private annuities rose in popularity with pensions resembling disability
insurance. With the rise of socialism, pensions not only grew in popularity but
replaced the family as support for the elderly. Unfunded pensions combined with
poor demographics in which the elderly comprise a greater portion of the global
population are leading to a situation that could cause the collapse of
governments globally. The future for retirement is seriously in danger. The
central banks are trapped and are unable to reverse course without admitting
they have been dead wrong.
Comments
It became
clear to me in the 1980s that defined benefit pension plans were unsustainable.
I terminated the pension plan at Electromagnetic Sciences, Inc. in 1993 and
converted it to an “age-weighted” defined contribution plan to compliment the
existing 401k plan. Pension plans need
to last a lot longer than companies do and companies don’t last forever.
Government
employees and union employees would do well to convert these plans now, before
a court takes away their monthly checks.
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