U.S. Said to Seek a Chrysler Plan for Bankruptcy

http://www.nytimes.com/2009/04/24/business/24chrysler.html?_r=3&hp

by kqr2 • 17 years ago

15 17 17 years ago

old-gregg• 17 years ago

Ugh... How is it that my future pension of $0 per month is less troubling to US government than pensions of ex-workers of a troubled auto maker?

Seriously, pensions? They expect pensions... What are they, from Mars or something? Who else gets pensions in this country?

chancho• 17 years ago

Maybe you should organize or something...nah why would you do that with such a fantastic personal healthcare market and rock-solid 401K performance?

I kid...partly. But the answer to all your questions is "organized labor."

Dilpil• 17 years ago

Instead of putting your 401k in stocks and bonds, you should've devoted it to making political contributions. The ROI is far greater, and the volatility much more manageable.

JimmyL2• 17 years ago

The real unfortunate thing is that most funds that are offered for 401k use are terrible, expensive, and perform badly.

adamc• 17 years ago

Since it was part of the deal they were working under, I don't fault them for wanting them.

To answer your question: Plenty of state and federal workers get pensions, as do public school teachers and other public servants. If they stopped offering them, the jobs would be that much less attractive. It's part of the compensation scheme.

JimmyL2• 17 years ago

Not many people - most get 401ks, which are a poor substitute (and incidentally, not originally intended to be used for retirement savings).

As for why they get pensions and you don't, it's mostly due to them being organized and having been around for a while. One of the biggest things that unions, when doing collective bargaining, argue for is that all members be treated the same way, as opposed to workers being treated differently depending on how long they've been there. This isn't to say that unions don't like seniority - they love it - but that after X years of work Joe will have the same benefits that Jack, who's currently worked X years, has now. This is one of their main things they offer to their members: look at what we got Jack, in X years you'll have it too. As a result, every time they redo their contracts, all the new guys get pensions not because people in other jobs get them, but because the other guys in the bargaining unit have it.

As for why they got them in the first place, that's what being part of a large union in a blue-collar field does for you.

Why does the government care? Because most large unions have well-oiled political machines attached to them. Union members have a disproportionately high voting percentage, and are very loyal to what their union recommends. They can get 500 people to do anything political (run a phone bank, show up at a rally, write letters, etc.) very easily and efficiently, which comes in very handy if you're running for something.

From their point of view, the bottom line is that they worked for years with an understanding that part of their compensation would come in the form of pensions, and now (through no fault of their own) the company is dying and can't afford it, because they managed their money poorly. From the government's point of view, it's about a bunch of people that are very politically active and soon to become a lot poorer and on social security.

eds2• 17 years ago

and now (through no fault of their own) the company is dying and can't afford it, because they managed their money poorly

For example, by giving their workers pensions and other compensation far exceeding their market value.

mattmcknight4• 17 years ago

The union leadership and the management have to be faulted here- they created a benefit based on continuing growth that can't be financially supported in a downturn. Anything besides a pension program that is funded as it goes and has market driven payouts has a high risk of turning into a Ponzi scheme.

The beauty of 401k is that the company gives you the money now, they don't just promise to give it to you in the future. As the pace of change continues to accelerate, it is a less and less likely that the company you work for today is going to exist in the same form at the time you retire. Think of all of the newspaper pensions- who's going to be paying those in 30 years?

Even if the companies establish separate pension funds that that can survive beyond the life of the company, the payouts from that fund will be based on the performance of its investments and the lifespans of the people that receive funds from it.

In short, I'd much rather have a 401k that can be rolled over into the investment freedom of an IRA (some place I can own short contracts) than be depending on a pension plan run by a company that may or may not exist at the time I retire.

timr• 17 years ago

Personal retirement planning is a recent phenomenon -- 401(k) plans didn't even exist until 1978, and they're not really intended to be a replacement for pensions!

Most of the auto workers who are expecting pensions signed up for a different deal than you did. These guys didn't have their whole lives to put money into a retirement account -- they were told that their employers would cover their retirement, and they planned accordingly. To have that safety net pulled now is a disaster for a lot of people, and I don't blame them for complaining.

U.S. Said to Seek a Chrysler Plan for Bankruptcy

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