Michigan auto supplier sheds pensions in bankruptcy

[Bozita]

Source: Detroit News

Last Updated: November 30. 2009 11:07AM
Michigan auto supplier sheds pensions in bankruptcy
David Shepardson / Detroit News Washington Bureau


Washington -- The government's pension insurer said Monday it will assume responsibility for the underfunded pension plan of a bankrupt Northville auto supplier -- at least the fifth supplier to abandon its pension obligations this year.

The Pension Benefit Guaranty Corporation said it will seize the pension plans covering 4,780 workers and retirees of Hayes Lemmerz International Inc., the Michigan-based wheel manufacturer -- a move that will add nearly $100 million to the PBGC's growing deficit.

PBGC said it is moving now because Hayes Lemmerz failed to meet the minimum funding requirements, and the company cannot afford to fund the pension plan and to successfully exit bankruptcy.

The Hayes Lemmerz International Retirement Income Plan is 54 percent funded, with assets of $110.4 million to cover benefit liabilities of $204.8 million, according to PBGC estimates. The agency expects to be responsible for $93.7 million of the $94.4 million shortfall. The plan was frozen on Dec. 31, 2004.

Read more: http://www.detnews.com/article/20091130/AUTO01/911300389/1361/Michigan-auto-supplier-sheds-pensions-in-bankruptcy

[Roland99]

1. The cracks in the dam just got a bit wider.

[pattmarty]

4. The "cracks" and "got wider"? There IS NO FUCKING DAM and............

..............the water is drowning US.

[Roland99]

8. Last I checked the PBGC was still existing.

It's going to cover 99.26% of the shortfall in this particular case.

While true that the PBGC has enormous debt and obligations facing it, there hasn't been been any effort made yet to bolster it, which is something not out of the realm of possibilities if it gets down to more dire circumstances.

[pattmarty]

11. My understanding of PBGC is that they only cover a percentage............

..........of what the initial benefit would have been at retirement. I can't exactly remember where I read it, but some employees at I believe an airline lost their plan through, again I think bankruptcy and they were only going to get a percentage of what their original benefit would have been. Maybe some others will chime in.

[Roland99]

14. That's better than nothing like the Enron victims.

With the market crashes of '87 and the more recent one, people should be aware to have a diverse retirement portfolio.

[mbperrin]

25. Or you could be an AIG exec and rake in the big bucks no matter!

Right?

[enid602]

2. 401K´s

Thank God for 401K´s. The only way to go. They may not be fixed benefit, but at least you have some measure of control.

[pattmarty]

5. 401K's blow.

[MercutioATC]

20. No. 401ks are good for some and not so good for some.

...just like everything else.

[rhett o rick]

9. No, there should be stiffer laws requiring companies to put retirement money in accounts that they

cant rob.

[pattmarty]

12. That's why I said they blow. It's kind of like the Wall st mess, like the...........

...........fucking wild west. either no or very few weak "rules".

[rhett o rick]

18. I agree. Put your retirement money on number 22 in Los Vegas. nt

[WriteDown]

3. This was the plan all along. nt

[kirby]

6. EVIL!

I see nothing more EVIL than screwing retirees who devoted a large portion of their life to one company out of their pensions.

Most of these PBGC takeovers result in perhaps 75 cents on the dollar and the monthly payouts are capped.

[Kokonoe]

7. Ohh the poor PBGC's growing deficit.

Thank GOD that Hayes Lemmerz has failed to meet the minimum funding requirements of Hayes Lemmerz and fucked 4,780 workers and retirees.

But Hayes Lemmerz is Too Big TO FAIL. At least to those few thousand insignificant humans.

[kirby]

16. Keep in mind...

When the PBGC fund runs out of money, it is allow to get our taxpayer money.

[rhett o rick]

10. The company should be required to pay on this debt. And if they have good years, bingo, they need

to repay.

[Psephos]

13. An old-school parts manufacturer in Michigan is emphatically not going to have any more good years.

The company cannot be required to pay on this debt because they are broke, busted, one rusty can of beans left in the cupboard, just like their industry.

[rhett o rick]

17. I am not a bankruptcy schoolar but from what i see, they didnt liquidate.

They just dumped their retirement debt and will continue business. This is not unusual. I think NW Airlines did the same. They continue in business and continue to find money to pay their CEO's and share holders but cant fund their retirement obligations. Taxpayers get it in the shorts. System stinks.

[Psephos]

19. That's a valid point.

The choice is between liquidating, closing the doors, and paying whatever's left to the pension fund, versus staying in business, keeping some people working, and moving from a defined benefit to a defined contribution plan.

If the money isn't there, it isn't there.

A million jobs are gone from Michigan. The root problem is the business model. Industrial companies must now compete globally, or throw in the towel.

[bobshin]

29. So it's okay to shed a lifetime benefit for the benefit of a company?

But not the worker? I am not in that situation but can you imagine working for a company for 20, 30, 40 years with the prize of a more comfortable retirement, tempering your salary all along with that in the bank, and then have it pulled on you so the company can continue to operate as if their broken promise didn't affect their bottom line? I think anyone that supports letting pensions go is jealous of those who got those benefits. It was not a bonus, it was a lifetime of savings promised to them for the entire time they worked for the employer. It's not the workers' fault that bad times were not part of the company's plans in that promise.

And why are companies now having to compete globally? Because a few people who have the power and means are directing it that way to grow their extreme wealth. They have lobbied and controlled and threatened both Dems and Repugs to follow their orders. This is not a business model problem, this is much larger. There is no way a company such as this one in Michigan has a chance in such a market. Why delay the inevitable and screw their promises to employees who built the company and allowed it to continue in business for as many years as these pensioners worked? If the money isn't there, then there's no reason to stay in business. Again, it's not the pensioners' fault the company didn't adjust to the situation and it shouldn't be on their backs.

[Bozita]

24. UAL dumped its pension obligations in bankruptcy court

[rhett o rick]

26. Exactly, but they didnt quit business. They still in business, I assume to make a profit.

I am just saying that they should share that profit with the taxpayers that bailed them out with regard to their pension obligations.

[bobshin]

15. Great, more government bailout money. Why not just make pensions a public option also?

We already have Social Security. Why not expand it by giving the option to contribute more with stricter guidelines(years of employment for one)? In this case we're bailing out a private company who accepted the responsibility by offering it and here we taxpayers are paying for the default on THEIR promised benefit. We either create a public option or continue down the unsustainable road of allowing private companies to determine terms and then pass on the costs to the taxpayer when they fail. Seems like this could actually become a trend if left unchanged.

[Romulox]

22. This is utterly insignificant compared to the Wall Street bailout.

Might want to steer your "moral hazard" analysis away from Michigan and toward Manhattan. :shrug:

[bobshin]

28. Not insignificant when you think of the extent and value of pensions

nationwide and how they've been pilfered and dishonored by many companies looking to shed costs. This is affecting people who worked for years for one company, who expected they were working towards a more comfortable retirement. My father worked for a company for thirty years, they claimed bankruptcy and he lost it all. He had to work 13 more years than he anticipated to recover a part of it- into his mid-70's. That's horrific. Most aren't so lucky to have that opportunity. Even though it was a large company, no insurance bailed out his pension and of course the company got away with throwing away an irreplaceable lifetime of savings. Not that the government needs to be guaranteeing more, but they already are with mortgages, student loans and bank deposits anyway.

[Romulox]

31. Unless it adds up to tens of TRILLIONS (that's "trillions" with a 't'), yes, insignificant

The Congress could guarantee every pension at 100% for the interest payments on the ongoing bankster bailouts. :hi:

[Romulox]

21. This is the trade policy we're supposed to fall in line behind...

Bankster contracts, on the over hand, are protected by something the President calls "sanctity". :puke:

[Deja Q]

23. And yet the President wants to encourage people to save into these plans via automatic enrollments?

http://www.politifact.com/truth-o-meter/promises/promise/21/require-automatic-enrollment-in-401k-plans/

People are losing faith in this system, if the pensions - made by money they put in thinking they would rightly get it back - are to be dropped just so the CEO can get another bonus for effing over his workers.

This is NOT the American way.

[rhett o rick]

27. I am afraid this is the new American way. The gullibles get duped into allowing their employers to

"invest" their pension money for them. Then the same gullibles wont support government regulations that would insure the employer doesnt run off with the pension money. That's government interference. Then the company dumps their pension obligation and the taxpayers pick up the ticket. I wonder how many of these gullibles getting their pension money from a government run program are tea-baggers out protesting government run programs. Idiots.

This is all moot anyways. No jobs, no worry about pension money.

Democracy is a dangerous thing, in a land of gullible chuckle heads.

[dysfunctional press]

30. why would ANY company with pension obligations not do the same...?

even more 'interesting' times ahead.