

U.S. Said to Seek a Chrysler Plan for Bankruptcy - kqr2
http://www.nytimes.com/2009/04/24/business/24chrysler.html?_r=3&hp

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old-gregg
Ugh... How is it that my future pension of $0 per month is less troubling to
US government than pensions of ex-workers of a troubled auto maker?

Seriously, pensions? They expect pensions... What are they, from Mars or
something? Who else gets pensions in this country?

~~~
JimmyL
Not many people - most get 401ks, which are a poor substitute (and
incidentally, not originally intended to be used for retirement savings).

As for why they get pensions and you don't, it's mostly due to them being
organized and having been around for a while. One of the biggest things that
unions, when doing collective bargaining, argue for is that all members be
treated the same way, as opposed to workers being treated differently
depending on how long they've been there. This isn't to say that unions don't
like seniority - they love it - but that after X years of work Joe will have
the same benefits that Jack, who's currently worked X years, has now. This is
one of their main things they offer to their members: _look at what we got
Jack, in X years you'll have it too_. As a result, every time they redo their
contracts, all the new guys get pensions not because people in other jobs get
them, but because the other guys in the bargaining unit have it.

As for why they got them in the first place, that's what being part of a large
union in a blue-collar field does for you.

Why does the government care? Because most large unions have well-oiled
political machines attached to them. Union members have a disproportionately
high voting percentage, and are very loyal to what their union recommends.
They can get 500 people to do anything political (run a phone bank, show up at
a rally, write letters, etc.) very easily and efficiently, which comes in very
handy if you're running for something.

From their point of view, the bottom line is that they worked for years with
an understanding that part of their compensation would come in the form of
pensions, and now (through no fault of their own) the company is dying and
can't afford it, because they managed their money poorly. From the
government's point of view, it's about a bunch of people that are very
politically active and soon to become a lot poorer and on social security.

~~~
eds
_and now (through no fault of their own) the company is dying and can't afford
it, because they managed their money poorly_

For example, by giving their workers pensions and other compensation far
exceeding their market value.

~~~
olefoo
You do not understand a very basic fact about pensions; namely that they are
an obligation that the company has.

Your statement makes as much sense as saying that the company is in financial
trouble because they have paid loans back in years past.

For the company to default on the pensions that they owe is just as bad if not
worse as if they were to default on their line of credit with a bank.

~~~
mattmcknight
They shouldn't be an obligation that the company has, that's what makes them
suck. They should be separately held funds that can survive beyond the
lifetime of the company (like 401k plans). To make them company obligations is
to invite disaster. It's analogous to the situation at GM where each current
worker covers the health care of 10 other people. If you want a pension plan
because you trust and want to pay pension plan administrators to manage your
assets, it needs to be a separate financial entity from the company itself.

~~~
olefoo
Think of it this way, the fact that it's an obligation is interface; that it
was not implemented as a stand-alone fund is the responsibility of the
managers. And given what has happened in the financial world in recent
years... it's quite possible that stand-alone funds would have been completely
wiped out through mismanagement or outright theft.

