3 ms·

Companies don't need to guarantee their persons. They can raid the pension fund, say "sorry!" and go bankrupt.

hannasanarion 6y ago
No, they can't. In a bankrupcy, pension funds get first dibs on all company assets, before lenders, shareholders, or any other interested party. A company has to be really, really fucked for their bankruptcy to not produce enough money to fund the pension. And in the rare event that that happens, pensions in the US are required to hold pension insurance, which continues to pay benefits when a pension loses income and their coffers run dry. My grandpa is still getting pension checks of around 40k/yr from the Pullman Car Company, which went bankrupt in 1968. Pensions are, very literally, guaranteed retirement income.
- dragonwriter 6y ago
  > No, they can't. Yes, they can. > In a bankrupcy, pension funds get first dibs on all company assets, before lenders, shareholders, or any other interested party. No, they aren't; funds already in the pension fund are separate and can't be taken in bankruptcy; wages owed have the kind of high priority claim you reference, but earned pension obligations do not. A bill was put forward in Congress in 2019 to alter this for Chapter 11 bankruptcies (to eliminate the “strategic bankruptcy to cut pension contributions” practice that explored the fact that it is not true), but died. Plans are typically terminated by a Chapter 7 bankruptcy, and can be terminated or modified in a Chapter 11. > And in the rare event that that happens, pensions in the US are required to hold pension insurance, which continues to pay benefits when a pension loses income and their coffers run dry. Aside from the fact that the PBGC multiemployer fund is itself underfunded, PBGC has an age-based maximum benefit guarantee, which will often be significantly lower than what a pensioner would have been entitled to under their original pension plan: https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum... > Pensions are, very literally, guaranteed retirement income. That's a nice thought, but it's not nearly as true as you make it out to be.

No, they can't. In a bankrupcy, pension funds get first dibs on all company assets, before lenders, shareholders, or any other interested party. A company has to be really, really fucked for their bankruptcy to not produce enough money to fund the pension. And in the rare event that that happens, pensions in the US are required to hold pension insurance, which continues to pay benefits when a pension loses income and their coffers run dry. My grandpa is still getting pension checks of around 40k/yr from the Pullman Car Company, which went bankrupt in 1968. Pensions are, very literally, guaranteed retirement income.

dragonwriter 6y ago
> No, they can't. Yes, they can. > In a bankrupcy, pension funds get first dibs on all company assets, before lenders, shareholders, or any other interested party. No, they aren't; funds already in the pension fund are separate and can't be taken in bankruptcy; wages owed have the kind of high priority claim you reference, but earned pension obligations do not. A bill was put forward in Congress in 2019 to alter this for Chapter 11 bankruptcies (to eliminate the “strategic bankruptcy to cut pension contributions” practice that explored the fact that it is not true), but died. Plans are typically terminated by a Chapter 7 bankruptcy, and can be terminated or modified in a Chapter 11. > And in the rare event that that happens, pensions in the US are required to hold pension insurance, which continues to pay benefits when a pension loses income and their coffers run dry. Aside from the fact that the PBGC multiemployer fund is itself underfunded, PBGC has an age-based maximum benefit guarantee, which will often be significantly lower than what a pensioner would have been entitled to under their original pension plan: https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum... > Pensions are, very literally, guaranteed retirement income. That's a nice thought, but it's not nearly as true as you make it out to be.