Why does taxing people who don’t have pensions of their own to pay the pensions of people whose companies underfunded their pensions increase fairness?
A Democratic senator is introducing legislation for a bailout of troubled union pension funds. If passed, the bill could put another $165 billion in liabilities on the shoulders of American taxpayers.
The bill, which would put the Pension Benefit Guarantee Corporation behind struggling pensions for union workers, is being introduced by Senator Bob Casey, (D-Pa.), who says it will save jobs and help people.
The Fox Business story cited is a bit garbled and hysterical. The $165 billion would only be if all of the companies defaulted on their pensions which seems unlikely.
However, there’s a solution to this problem. Union pension funds covered by the PBGC should be paying premiums into the PBGC. Increase the premiums charged by the PBGC to cover the shortfall. Additionally, premiums charged should be proportional to risks. If a company is underfunding its pension, its premiums should go up.
Government employees should be in defined contribution plans like everyone else. AFAIK, no state, red or blue, is doing this. Texas, a very red state, has a defined benefit (annuity) program. I just ran their calculator and if you retired at 30 years, making $4000/month, you would retire with $2791 per month.
http://www.ers.state.tx.us/retirement/default.aspx
Couple of thoughts. If we could not reduce the pay of CEOs and other bank execs because we needed to honor the sanctity of their existing contracts, wouldn’t this also apply to contracts with unions or federal workers? Suppose these workers did not belong to unions. Would it then be acceptable to make good on those pensions? Are people mad about unions or the pensions?
Steve