If the auto industry is allowed to dump their pension plans through bankruptcy, it could put the pensions of millions of other retired workers at risk. The Pension Benefit Guarantee Corporation, the government insurer that backs pension plans, would quickly run out of funds and be overwhelmed with claims. It would be forced to slash promised benefits to retirees. It would also open the door to other companies looking to dump their pension obligations through bankruptcy court.
The dire state of the Pension Benefit Guarantee Corporation's decision to gamble its money in the stock market certainly hasn't helped things, as we noted here earlier this month.
The holes in the pension fund and related dire circumstances of 401(k) programs have been apparent for some time.
James Ridgeway reported on corporate America's plans to ditch their obligations to retired workers back in this article from 1999.
We can only hope that the current situation will put an end to any more calls to privatize Social Security, which is becoming the default retirement plan for more and more Americans.
From the NYT:
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