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News ::
24 Jul 2003

By G. Dunkel
Via Workers World News Service
Reprinted from the July 31, 2003
issue of Workers World newspaper


By G. Dunkel

It may have been only a spat between Republicans and Democrats when, on July 18, House Republican leaders on the committee handling pension reform called in the cops after Democrats walked out in protest over Republican changes to new legislation. But it was no charade. Hundreds of billions of dollars are at stake.

Not that the Democrats went to the mat to protect workers' interests.
They just wanted to prevent the Republicans from ramming through a bill that would damage their allies in the business world.

The major issue is a change in the law and regulations concerning
private pensions. A Democratic bill would have forced the 32,300
companies offering traditional pensions to set aside $200 billion over the next 10 years. A Republican substitute bill reduced that to $48 billion.

Watson Wyatt Corp. estimates that 63 percent of these traditional plans don't have enough money to meet their obligations to workers.

Basically, the companies, having made lots of profit off these workers over the years, have used the workers' pension money for other things. They have invested some of it on the stock market, and had losses. They have used some of it to expand in order to knock out their competition, only to find that everyone else expanded too, and now they've outgrown the market. This is typical of capitalist firms in a period of boom, and leads directly to recession.

Now they don't want to dip into other funds to meet their obligations to retired workers. Companies in some industries, like the airlines, which have $22 billion in unfunded pension obligations, say they might go under or out of business if they have to make these payments. The companies are even resisting calls to provide more timely information to their covered employees.

The Pension Benefit Guaranty Corp. is a federal agency that insures the pension plans of 44 million workers and retirees. When a company can't meet its pension obligations, the PBGC is supposed to step in. It reported in 2002 "a net loss of $11.4 billion, the largest in the
pension-insurer's 28-year history" (Wall Street Journal, Jan. 31), and blamed much of the losses on bankrupt steel companies. The workers in Bethlehem Steel's pension plan also suffered a severe loss when Bethlehem went bankrupt and PBGC took over pension payments. They got far less than they were entitled to.

The PBGC estimates that today company pension plans are "underfunded"
to the tune of $300 billion; as recently as 1999 that figure was only $23 billion.

A pension is not a gift from an employer to reward faithful service. It is salary retained by the boss that is supposed to provide income for workers when they cannot or no longer want to work. In many countries, all pensions are publicly guaranteed and administered, but not here.

In the United States, the government plan paid to almost all workers is Social Security, but for many workers it doesn't cover even basic
expenses. Many workers rely on private pensions to provide the bulk of retirement income as well as significant medical benefits.

Workers have earned their pensions and have a right to them. Bosses
should not be able to play financial games with the connivance and
agreement of the government.

A real reform would not only force companies to pay what they've
promised--it would force them to pay a fair pension that reflected the true value of what the workers produced for the company and would
guarantee that every worker can retire in comfort and dignity.

- END -

(Copyright Workers World Service: Everyone is permitted to copy and
distribute verbatim copies of this document, but changing it is not
allowed. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: ww (at) Subscribe wwnews-
on (at) Unsubscribe wwnews-off (at) Support the
voice of resistance
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