Bankruptcy and Legacy Benefits. Time to Eliminate Them.
 

When a company (USPS) or even a city (Detroit) files for bankruptcy, do you believe that their workers should retain 100% of their legacy benefits despite the institution is bankrupt?

That appears to be a major sticking point in some of these school districts, cities, companies, and even state government jobs. The 'institution' has become insolvent, but the legacy workers should keep their forever benefits and free healthcare.

:helpme

Well that is how it works in rest of world,i always found it a bit weird how that works in Usa.I still remember hearing first about this american way in golden girls episode where blanche lost her pension beacuse company of her husband bankrupted.
Anyway when it comes to pension system i think nor the rest of world system nor american system is not good enough.

The American ignorant need to educate themselves on the difference between a socialist ideal and capitalism that they hold on to the latter white knuckled. If they want to endlessly have their hand out and peace of mind that their legacy benefits never go away regardless of what happens in the world, they should invest in the power of the nanny state. If you want low taxes and the capitalist way, then once the city/state/business/school district goes belly up, it's bye bye benefits. The private sector does not get these safety nets.

:2 cents:

A smart company has there pension done by a investment company or a plain old insurance company .

They should be able to keep them, but not at 100%.
We get tagged about once a year with a customer going bankrupt and to date we've never recovered a penny. It sucks when it happens but we still have a steady stream of revenue.The problem with most corporate bankruptcy proceedings is that the trustee(a large law firm) always walks off with the biggest amount of dollars.

It would be difficult to negotiate with legacy benefit holders but 50-60 cents on the dollar is better than zero cents. A lot of people that I know that are retired, do have other income streams and the pension is often just the icing on the cake.

Some sort of mediator that could look at a few years worth of tax returns could come up with a reasonable percentage for the folks.

True dat fine sire.

:thumbsup

Yes, because suddenly cutting pensions from people who earned them by working for decades after collectively bargaining for them with the government is a great idea. Nothing sparks economic recovery like suddenly making old retirees poor - except perhaps showing the world that government entities are unwilling to honor the binding legal agreements they freely entered into with an entire class of hard working law abiding citizens. Who needs habeas corpus, privacy rights, the rule of law... Fuck it, we ought to just make it all up as we go along, lie to our own citizens, swindle them as often as possible and create a parasitic rather than symbiotic economy. Terrific idea. It won't eventually lead to a revolt where the poor behead the rich (as similar policies have proven generation after generation around the globe).

This is exactly the kind of stupidity that the 2nd Amendment was actually intended to prevent.

They should keep 100% of what they were legally promised. If you want to change the policy regarding new hires with a new collective bargaining agreement that's great. The existing pensioners bargained for lifetime pension and gave up other things to get them. They have a legal contract from our government. When a government ignores its legal obligations you have nothing more than a banana republic.

Welcome to Chiquitaland!

Have their hand out? Umm those people did their job and earned their retirement/medical benefits. Why should they be penalized for corruption and big business fucking over the city?

They didn't do it.

..........and where is the money going to come from to continue to fund these hand outs?

Are you saying that you're more than willing to stand up and take one for the team via a tax increase locally or federally to pay for these retirees and their missing funds? The pension funds do not have the money, so it has to come from somewhere. I guess in your world the money will just magically appear, but you are not going to pay for it in some way.

I think that is what you're missing here. These people want their 'promises' but there is no money to pay for it. It has to come from somewhere. Since you're so holy than thou they should get it, I guess you are more than willing to pay more in mileages and taxes to fund their pensions than?

Everyone publicly claims they should get the money. Yet few want to actually PAY for it.

:2 cents:

Other creditors had a "legal contract" too, why is pension contract any more important? What if I'm just an average worker who chose to invest his retirement funds into Detroit bonds... Detroit goes bust, I'm shit out of luck? but the worker who worked for Detroit is not? We could have been performing the same exact type of job, could have had same exact pay, etc, but the guy who happen to work for city of Detroit should get different treatment?

The government doesn't have the money to fund all of these defunct cities and pensions. Where is the money going to come from to pay for them exactly.

:helpme

You are confusing two questions...

1 - Should the government have entered into these agreements?

2 - Did the government enter these agreements and must the government abide by agreements it enters into?

The answer to #1 has nothing to do with the answer to #2. If you don't like the agreements, don't make more of them and vote out anyone who wants to create new ones. I agree with you lifetime anything is a bad economic decision. That doesn't change the debt owed to people. The same holds true the other way around... Having student loans excluded from bankruptcy protection is beyond idiotic, but you won't see banks, schools or the government retroactively toying with those commitments either.

You'd love poland - that's a perfect description :1orglaugh

It would be funnier if it wasn't so true.

Has it served Poland well over the years?

Problem with pension funds is that they promise a fix amount ( like 70% of your salary, the highest 5 years ) .
It is not possible to sustain such pensions, as there are too many variables, among the most important :

- expenctancy of life
- ROI on the actual fund

Workers getting pension funds should not get a a fixed amount, should be able to vote on who manages it , and should consider themselves lucky that their employer contributed half or more to their future.

I got no problem with people that worked union jobs that were suckling off the government teat all their lives reaping the fallout when the same entity goes bankrupt.

Ideal way to handle pensions would be where all funds would be insured(like for banks,where if you want register a bank you need to pay 40 millions for insurence and pay even more during working years),where all money would go to fund(not partly into country account partly into fund account),so that way pensions would be always safe even if country/city/whatever is broke or one of funds goes broke as well.

They should just do away with all the retirees pensions and simply send them a few cases of cat food to save them the trip of getting it...

In Detroit the are still going to build Red Wings arena with $283 million in property tax funds.

there is a lot of money available if you stop bailing out the stock markets, cut the military budget and end corporate welfare like sport stadiums built for millionaires with tax money.

In a perfect world these pensions will have been funded as they went and that money should be in a separate, untouchable account that is used only to pay the pensions. That way when a guy works for the city or company for 30 years and then retries the city/company has been putting the money for his pension/benefits away for 30 years (like a 401K) and that money is there no matter what. Sadly, that isn't how many places do it. Instead, when someone does retire and get those benefits they just add the cost of them to their budget as a new expense.

The benefits were a negotiated piece of your wage and part of your agreement to work for that company/city. In the event of a bankruptcy like Detroit's they should consider paying these people at least a reasonable part of these benefits one of their main priorities.

What is the alternative? Those people end up in the system. If a retiree gets health benefits from a pension and money and they are physically ill and need to live in an assisted living center they can potentially afford a decent one. When they lose that pension they will end up on medicaid which will be used to pay for that service and leave them with about $50-$100 per month left to spend. People shouldn't be forced to go from living in a decent manner to living in poverty and relying on the system for support just because the management of a company/city fucked up. If it can be avoided and they can be paid they should be.

So someone working in sanitation should lose their pension over this bankruptcy while the creator of little ceasar's pizza should get a quarter of a billion dollars to pay for a new hockey rink?

It is important to realize that everyone knew they could not be paid when they were written. The problem did not form yesterday, it has been known for 30 years or more. The pension funds were always under funded and the promises in the future were a known problem. The people in power buckled to the unions as it would not e their issue when it finally was an issue.
So you got too good of a deal, and it killed the host. Oops.

So you can't blame the union in this instance. They made demands and got what they wanted. If the companies/cities knew they couldn't afford it they should have never made the deal. Sure, there may have been some fallout at the time, but it would be better to deal with it then and make it work than deal with it 20 years later when it has all fallen apart.

I look at it like professional sports. If a guy is a MLB pitcher and he asks for $20 million dollars per year and a team pays it, it isn't his problem if that causes the team to have financial issues down the road.

A good example is the Texas Rangers. They sign Alex Rodriguez to a huge deal that is 10 years for $252 million dollars. He asked for, negotiated for it and got it from them. Of course a few years later the Rangers realized that they couldn't afford this and if they were going to pay him that much they didn't have money left to build a team around him so they lost a lot of games which cost them money. Only when they got rid of him and were able to afford other players did they start to win.

It isn't A-Rod's fault that they lost. He played well for them. He won an MVP while playing for them. He did what they asked of him. Halfway through the contract when they wanted to get rid of him he was also not out of line demanding that he get paid the rest of his contract.

This has become an epidemic of CEO's getting paid millions to restructure companies by filing for bankruptcy to avoid paying out pensions and it won't end anytime soon. If municipalities would quit borrowing money like drunken sailors with unlimited credit lines and then taxing the hell out of their citizens to pay for it then it wouldn't be a problem for them. My city just finished up their latest multi-billion dollar "investment" which is projected to lose millions more for years to come and that's just on the electric bill. It's no surprise to me when they say "it will be made up on tax dollars" hoping everyone will forget it's not a profitable "investment" and another reason to raise taxes.

The town I live in has a public swimming pool. I basically costs $2 to swim there if you are a resident of the town and they have memberships available for regular swimmers who want a better deal.

About five years ago the town started a campaign and put a measure on the ballot to build another public pool. It would be the same size, but newer and "better." Many people were behind it. They told everyone the financing structure for this pool would not raise taxes. There was one little problem, the profits that they projected from this pool were not going to be anywhere near what was needed to pay back the debt of building the pool. This means the debt would eventually be passed onto the tax payers, it would likely just not happen until 8-10 years down the road when they hoped everyone forgot about it.

Luckily, the word got out and and the measure failed. In the end the entire thing was basically just a big contractor trying to get the city to build something it didn't need and couldn't afford so they could get the contract and make a bunch of money.

Unions absolutely can be blamed.

Of course it would have been better to deal with the fallout at the time. But hello, your (and my) political system creates this kind of "pay it forward" situation. In fact, the whole of the USA is probably in this kind of a situation and I don't see your populace screaming about it too much.

The simple fact is unions like big corporations live to extract money by any and all means. When you have unions exerting political pressure, buying ads, supporting opponents, etc, then union members deserve what they get when their union extracts too much in their parasitic disgusting ways and as someone else said, 'the host dies'.

What you seem to miss is this isn't hand outs. It was part of their employment package.

There is a reason the unions always support the democrats. They wrote some great deals together. Unions give the right people a lot of cash to get elected. and they in turn give the unions sweetheart deals. Unless you live in Wisconsin. Our governor had the balls to stand up to them. Twice!

Yet you know just as well as I do, that the Republicans do the exact same for big business. The only difference between the right and left is who writes the checks and who gets the payouts.

Personally I'd rather see average Joe's getting a little payout rather than greedy CEO's getting even richer off the tax payers tit.

Yep and alot of times they took other cuts to keep those. Also you cut someone 70 yrs. we are all going to pay for it anyway.

What balls? Unions are now less than 7 percent of the workforce. It's a boogie man with no teeth.

So no blame falls upon the city/company. If you own a company it is your responsibility to run it properly and to honor the contracts and agreements you make. If you know a union contract is going to hurt you down the road you shouldn't sign it. You brought this on yourself.

Often the unions are simple the scapegoats as well. The companies/cities that end up bankrupt usually have a hell of a lot more problems than just bloated contracts. The city of Detroit is a good example. I have read a few different articles from pretty reliable sources like the Wall Street Journal explaining how Detroit got to where it is now and bloated union contracts is pretty low on the list of things that were done badly.

This happens on both sides of the aisle though. Oil companies contribute heavily to various politicians(many republicans, but also a good number of democrats including Obama) and in return they get anywhere between $10 and $52 billion per year in subsidies and the government gives them rights and locations to drill. I'm not a union lover. I think they have some use, but in many cases they protect lazy workers and often end up screwing over their members, but I think it is fair to say that big companies play the same games with politicians as unions do.

Unions are now the go to scapegoat for many republicans because they (and democrats as well in different areas) don't want to face the real problems. It is easy to say that the teachers are greedy and the teacher's union is out of control than it is to accept the fact that the public education system in this country is corrupt, broken and in need of a deep, serious overhaul.

The whole event here made the national news daily for weeks. Wisconsin is now one of the states that has a budget surplus.

http://www.thefiscaltimes.com/Articl...les.aspx#page1

So......... those whole city of Detroit, which is around 3/4 of a million people, and that metro area of a few million should suffer for the benefit of a few thousand and their promised benefit the city can no longer afford?

:helpme

Dealing with this locally as Kodak emerges from Bankruptcy.

Not sure why someone who retired 25 years ago thinks they should still collect what amounts to almost a full paycheck while the company is struggling to keep afloat.

I think that they just pieced off part of the business and put the "pension fund" in control of it.

A don't even get me started on city public schools. I love living in the city, but the schools blow. 80% of the kids don't even graduate. Corporate controlled charter schools seem to be the solution here.