Monday, March 23, 2015

U.S. Congress Clears Deck for Pension Decimation

The Columbus Dispatch reported:

Many retirees are unaware "of the risk to their pension as a result of the legislation passed in December as part of a spending bill meant to run the federal government through the rest of its fiscal year.  The legislation affecting the retirees was added at the last minute.  It is targeted at companies that enter into pension plans with other companies.  There are about 10 million workers and retirees in 1,400 multiemployer plans, according to the Pension Rights Center in Washington."
How does such an important piece of legislation, one impacting millions of retirees on a long term basis, get inserted into a federal temporary funding bill?  It's a result of corporate sponsored politicians.

The Carlyle Group's major innovation was locating in Washington, D.C., the home of purchased politicians and a $3.5 trillion budget.
Corporations and their private equity underwriting (PEU) owners hate funding pensions.  They'd rather use cash and borrowings for dividends and special distributions.

Consider this 2011 statement from an ex-business reporter:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out. 
The Carlyle Group shed their pension liability in their deals for RAC and Brintons'.  PEUs will take any chance they have to dump health care and retirement expenses to workers.

Congress helped them out with PPACA, commonly known as Obamacare.  Corporations imitated public exchanges, offering private exchanges to retirees.  In doing so many turned retiree healthcare into a defined contribution benefit, where the employer pays a fixed amount and the retiree "shops" for a plan.

The big hits are on the horizon.  Pension accounting changes are expected to show massive funding deficits for many state and local pensions.  If you think this isn't coordinated consider:

May 3, 2014
A new office at the U.S. Treasury Department will focus on state and local finance issues, including distressed municipalities and their management of pension and other unfunded liabilities.

September 9, 2014
In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA).
The greed and leverage boys know tapped out state and local governments, with reduced ability to raise debt, will need to turn their way for infrastructure projects.  Private equity likes paying reduced prices for predictable revenue streams.

PEUs and their purchased politicians never let a good crisis go by.  Pensions are the target, which happen to come with spillover benefits.