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
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.