The Gutting of our Pension Plans

[screembloodymurder]

On Feb. 9, 2006 the US started issuing 30 year bonds again. The question is: Who would invest in a 30 year bond when they can get a higher rate on a two year note and with significantly less risk? The answer: You and I might .... through our pension plans.

Here's the problem. The bonds do not return enough to keep pace with inflation and if rates go up the bonds will go down in value. In an inflationary scenario this could result in a substantial loss of value. Not only will we not keep pace with inflation, we'll lose our principle. We all need to contact our pension fund administrator to see if they plan to invest in these bonds. Given the governments deficit spending, why would anyone invest long term at a lower rate?

[Nikki Stone1]

1. Add this to the fact that pension plans--even gvt ones--are being

borrowed against, liquidated, leveraged, and basically left vulnerable to every unethical business practice and I would say that we are looking at the death of themiddle class retirement.

[DemInDistress]

2. How can this be stopped? I am willing to help even though I

don't have a pension plan..

[antigop]

7. Here is what you can do

Right now Boehner is trying to get his so-called "pension reform" bill through Congress. Boehner wants to legalize cash balance plans. When a company converts to a cash balance plan, employees can lose as much as 40% of their expected pension. It depends on how the conversion is done -- it is usually (always?) not in the employees' favor.

TELL BOEHNER TO KEEP HIS HANDS OFF OUR PENSIONS!

Contact your representatives and tell them that ERISA (the laws that protect pensions) needs to be STRENGTHENED, NOT WEAKENED.

Any help you can give will be appreciated.

We stand to lose thousands if Boehner gets his way.

[DemInDistress]

8. I'm in NYC do I seek out my guy, Crowley? nt

[ThomCat]

3. It's already near-certain that pensions are gone

for a whole lot of reasons. Only the rich will get to retire.

Isn't that part of the whole republican plan?

[Nikki Stone1]

4. This is the issue.

There is a wholesale destruction of middle class protections going on. And yes, it seems like only the rich will have any chance of retiring comfortably.

[Yupster]

5. Yes pension plans are history

Almost all companies have already gotten rid of their defined benefit plans.

In a few more years the only people who will have pension plans will be government workers.

[antigop]

6. Not true -- not yet anyway

There are still many Fortune 500 companies that still have pension plans.

Some (such as IBM and Verizon) have frozen their plans.

There are still quite a few pension plans in existence.

[Yupster]

9. That's a good question

How many fortune 500 companies currently have defined benefit plans, and how many had them 20 years ago.

I wish I knew the answer to that but I don't.

I know they are going away though.

Pension plans just don't make sense for companies.

A company like GM may send out 400,000 checks a month to its retirees. They may get 2,000 of them returned to them each month because the person died, got maried, got divorced, went into a nursing home, etc.

The company has to have a whole department of people who do nothing but process name changes, estate settlements, address changes, etc. Finally a company says, what are we in business for? To make cars or send out and process checks for people who haven't worked for us for 20 years.

It's a no-brainer. Pensions are gonna be gone if you work for a company worried about profits.

[iconocrastic]

10. I'm no expert, but foreign governments are reportedly heavy buyers

on these bonds.

Robert Rubin got rid of the 30 year bond because it was cheaper then for the government to borrow at shorter rates. Took a risk and it was controversial but it worked.

Now long rates are very low, so it will reduce borrowing costs and the cost of the deficit for the government. They decided to lock in the low rates for 30 years. Good move for the USA. Those who bought the paper bought the risk.