Just Payin' the cost to be the Boss

or not as it turns out.

Have you been following the pension news lately? I guess the spark was United Airlines. They went to a judge and got out of having to pay off a pension plan they were supposed to have been funding. The excuse I guess is that it is better to have the company solvent and to DO all the retirees than it is to have the company fold.

I'm not certain I agree. But then its not my job, my stock, or my pension in play. Perhaps that would change my perception.

I will say, as a taxpayer, I'm not thrilled knowing that a federally backed corporation will now be settling the pension debt at a reduced rate. I think that in principle funds like the retirement guarantee and the FDIC and FSLIC were put together to protect the individual's money, not the company and the ownership or management that lost it. More and more often though it sounds like at the end of the day even with the protection its the company that gets to keep the mine and the individual that gets the shaft.

Also, just as a sideline, it seems odd to me that the same people that are chicken little "the sky is falling" about Social Security and how the government can't be trusted with our money are fairly blithe about corporations pissing away the rightfully earned pensions of thousands (millions?) of hard working Americans.

If I were the judge in these cases I guess I would want to be sure that the workers got their due first, and likely that the shareholders got their piece of the pie too. The management of the companies shouldn't see dime one until everyone else has been paid. But that doesn't appear to be what happens. In reality it appears that the company loses a ton of money and then declares bankruptcy so that their suppliers and creditors take the hit. The company then uses the bankruptcy to roll back fairly negotiated wages from their employees (or they simply close up shop and cut off the employees). Then after they squeeze everything out of their workforce they can, they go to a judge and welch on payment of pension funds.

Now this isn't to say that labor doesn't share some of the blame for how we got here. Often it does seem like a high salary structure is partially attributable to the problems experienced. But let's face it, the employers did make the deal, and in good faith. They could have declined, but they didn't. They should not get to walk away from it now just because the payout was structurally deferred. The deal was "we'll give you that money later" not "we'll see how we're doing any pay you if all goes well." It's an annuity, not a stock option.

I swear, the Federal Retirement Guarantee Corporation ought to have a collections division that would make the mob squeamish. They ought to hunt down every Vice President of This and Chairman of That and repossess every last nickel they have and put it toward the settlement of the retirement funds before one cent of Federal insurance gets paid out.

If you're one of the guys on the line in these companies and you screw up you lose your gig. If you're one of the guys running the show and you tank the whole company you walk away with severance and the government lets you out of your obligations.

Something is wrong in that equation.

I've often wondered why health care has anything to do with your job. Lately I've lumped in pension as well. Maybe the "personal accounts" people have it right afterall and they're just aiming at the wrong pensioner. The new motto is going to be "Get your money up front." Or maybe in labor negotiations "Don't tell me what you are going to do, I've been burned before. Show me the money!"

I mean, on the face of it it really doesn't pass the sniff test does it? Try it on for size:

"What we want you to do is to do this work now, and if you do we'll pay you some money now, and then a little bit more 30 years from now."

Why would anyone take that deal? Probably seemed gracious at the time companies started to offer such plans. Hasn't seemed so gracious lately. It's going to make the cost of doing business higher, but I think American Industry is going to be hearing a new tune from Labor.

Show me the money.

(Now if you'll excuse me I am going to check on the status of my employer's Vangaurd contributions - need to see if the deseminations are concurrent or deferred.)