Thursday, October 23, 2008

Pension Problems

Across the country businesses are failing. In some cases the straw that broke, or is breaking, the proverbial camel's financial back is their defined benefit pension plan. Do a Google search and see how many references pop up regarding pension plans and company failures.

I've written about Fayette County's vote to enact a defined benefit plan for their 600 plus employees before and most are aware of the problems the county is dropping into our laps. At a time when everyone else in the country is scrambling to try and fix their nightmare plans, at a time when tax revenues are down and everyone is trying to figure out how to afford to buy groceries, our "leaders" are giving away our future.

Sure, it'll start out fine, but the guys who are mortgaging the future of our county will have moved on by the time the fiasco hits our pocketbooks. The employees who sat on the committee that studied the feasibility of implementing a defined benefit plan will be retired and living off our tax dollars.

Every time I mention a DB plan to a financial planner and even to those who sell the product, they are horrified that our county will soon have that type plan. When I show them the comments made by Interim (still?) County Manager Jack Krakeel and Commissioner Jack Smith, they laugh. Everyone says exactly the same things they've said and everyone of the plans ultimately causes a huge financial burden on those paying for the plan.

The County has a wonderful plan in place that takes good care of the employees, especially those who are wise with their planning.

Why am I ranting about this one again? Well, the County is getting ready to finalize which plan they'll put into place AND I just received the following communication:

Isakson, Chambliss Urge Delta Air Lines, Pilots’ Union to Reconsider Termination of Retired Pilots’ Pensions

U.S. Senators Johnny Isakson, R-Ga., and Saxby Chambliss, R-Ga., today sent
a letter to Delta Air Lines CEO Richard Anderson and Captain Lee Moak, Chairman
of the Delta Air Lines Master Executive Council, urging them to reconsider a
proposal to make a voluntary contribution to the Pension Benefit Guaranty
Corporation for the benefit of retired Delta pilots and to work toward finding a
solution that protects the earned benefits of employees and retirees alike.

The text of the letter is below:

Dear Mr.
Anderson and Captain Moak:

As you know, we worked tirelessly on behalf of the Delta employees, retirees, and their families to pass into law provisions allowing airlines to spread their pension plan funding over a more manageable schedule. We did this to protect the 91,000 Delta Air Lines pensioners and family members in Georgia from losing their pensions and to help protect American taxpayers from having to pay for those airline pensions.

We understand that over 5,500 retired Delta pilots have had their retirement plan terminated and turned over to the Pension Benefit Guaranty Corporation (PBGC). Our understanding is that a majority of retired Delta pilots receive only a small percentage of the monthly retirement benefit they earned while employees of Delta. We are also told that a number of retired pilots receive zero benefit from the PBGC, and many more get a monthly PBGC payment that equals half or less than half of their Social Security benefit check. Finally, we are told that Delta will be assuming the pension liabilities for over 30,000 Northwest employees and retirees.

A group representing thousands of retired pilots recently sent a proposal to you, Mr. Anderson, asking Delta to make a voluntary contribution to the PBGC that would partially correct this issue. They also raised the issue at the September 25, 2008 shareholders meeting. As proponents of legislation designed to save these pensions, we were disappointed to hear that the response from Delta at that meeting was that this was considered a closed issue.

We urge you both to reconsider your positions, and to work towards finding a solution that protects the earned benefits of all employees and retirees. We appreciate your attention to this matter, stand ready to assist you in any way possible, and look forward to your response.

Johnny Isakson

United States Senator
Saxby Chambliss
United States Senator

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