Many middle class families lost their life savings in the Enron collapse and other corporate financial scandals that were an early warning of the devastation caused by the Bush/Republican years. The legislative response was the best that compromise could manage under the circumstances, cutting the fudging of pension assets by averaging in half and giving corporations a couple years to start getting on track to catching up. Of course, since then, while many companies were doling out executive bonuses, some haven't been putting ANY money into their pension plans...because they were able to project that the stock market would keep rising so much that they already had plenty of money in there. Now those companies want Congress to help them forget about their pension obligations for another few years. More below...
from pension pulse
The Committee on Investment of Employee Benefit Assets is kicking off a lobbying effort today to delay provisions of the Pension Protection Act that it says will force companies to drain cash flow to comply with funding rules set to take effect next year.
It used to be that pension plans would just invest their funds in 30 year treasury securities. Safe and you know what the interest rate will be for the next 30 years. Then with a little help from Wall Street, pension plans started buying stocks. If they could make more money from stocks than from treasuries, it meant the companies could put less money into their pension funds. More money for executive pay and bonuses, golden parachutes, and the like. But it was even better than that because, while the interest rate was known for treasuries, with stocks what they would be worth in 30 years was unknown. So what companies started doing was estimating what the stocks would be worth and surprise surprise the projections could quite rosy if a company was inclined to fudge their numbers. It was kind of like projecting what a house in LA would be worth in 30 years...which looked like quite a lot back when the pension protection act was passed. The pension plans looked so rosy for some large well known corporations that they put NO money into their pension plans in years when the stock market was booming.
Of course now the stock market is not booming. And now the same lobbyists that watered down the original pension protection act so that corporations didn't really have to start funding their pensions adequately for a couple years, now want to defer for another few years.
Anyone who is not a lobbyist or a corporate executive should be worried. Even if you don't work for a company with a pension (like myself), this is one more ticking financial timebomb. And of course like Fannie and Freddie, the government is guaranteeing pensions. We need to draw the line with the end of the Bush presidency. Time to stand up for the middle class. And Democratic Congressmen like Earl Pomeroy should not get a free pass on this one either.
Here is what Congressman Pomeroy said
``Any stimulus package needs to address the pension issue,'' said Pomeroy, a Democrat and sponsor of legislation that would delay the pension act's ``draconian'' funding provisions.
So you see the lobbyists want to sneak a little executive stimulus into the new stimulus plan legislation, at the expense of the middle class.
Under President Obama we need continue with the rollout of the Pension Protection Act as defined by the original legislation. It really is at best the minimum of what needs to be done...even President Bush signed it.