Western Railroad Discussion > OT Truckers to get a bail out?

The Wall Street Journal reports that the national pension plan for truckers has less than 10 years of viability. The multi employer pension plans have enormous shortfalls.

Truck rates don't reflect the cost of pensions. Unlike railroads which generally have adequately funded plans and railroad retirement. Simply requiring all truck companies and operators to adequately fund pensions would level some of the competition.

Posted from Android

Wow what a news flashn not, there are many other priavate plans just like that one, Teamsters Union has some that are the same way not enough new memebers paying in at some locals causing problems. The government was supposed to have fixed this with some oversite or law way back about 20yrs ago. Seems that didnt happen too well so bottom line, nothing new about the problem thats been going on for  years. A company goes out of business, goes broke or something along those lines and uses the pension plan to fund some item. Result its gone, this one is not enough new blood coming into it so it can be kept afloat.
 

Weren’t miners also some of the pensions that were coming up short?

Posted from iPhone

My wife is a retired flight attendant. Her airline declared bankruptcy many years ago and their pensions went to the Pension Guaranty Trust Corp (PBGC). So she gets approximately 40% of the amount she was entitled to get. It's better than nothing and at least this amount is guaranteed by the federal government. The PBGC website states they are administering 37 million pensions. That's how many "promises" have not been met. The deficiencies of the private pension funds are not any different than all the government employee pensions as well. Our economy is very fragile because of borrowing - personal, corporate and government.

BB

The mine workers pension is also in line for a bail out.

Federal oversight of pension plans and multi employer trusts is a lot less aggressive than it used to be.

Of course, state and muni pension plans are in a similar mess. 30% funded is not good...

Posted from Android

BAB Wrote:
-------------------------------------------------------
 Seems that didnt happen too well
> so bottom line, nothing new about the problem
> thats been going on for  years. A company goes
> out of business, goes broke or something along 
> those lines and uses the pension plan to fund some
> item. Result its gone, this one is not enough new 
> blood coming into it so it can be kept afloat.

Yes, exactly. Extreme example is Bethlehem Steel Corp. The "Steel," once the second largest corporation in the world at one time, had lots of problems that led to its bankruptcy in 2001 and subsequently being dissolved, but the underfunded pension obligations were the biggest. After years of being hollowed out of paying workers, the pension fund at the end had 13,000 paying dues members trying to support 130,000 retirees! Easier to roll a boulder uphill... All the rest of us are paying for all these folks to get retirement money from the PBGC, as if a secondary social security program, and none of it can last forever unless some drastic changes are made. Seems unlikely.

JG



Edited 2 time(s). Last edit at 07/25/19 11:46 by jgilmore.

Multiple employer association trusts have another wrinkle. As employers fold, the surviving association members are stuck with the liability of the other guy's retirees.  Like dominos, they fall.

Which is why UPS paid billions to get out of the joint teamsters plan and run their own program.

 

Did not just about every major airline file for bankruptcy before 2009, just in order to get out of their pension obligations?  Every airline employee I know has taken a huge hit in their pension.  

Pensions in the Private sector will be gone, and all new employess will have to have 401's.  The union contracts will be change d to remove pensions.  This will happen to government employees in  all sectors as well.   There is just now way to fund them. 

If retirees would just die sooner as they did 60 years ago.

Bob Wilcox
Charlottesville, VA
My Flickr Shots

bobwilcox Wrote:
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> If retirees would just die sooner as they did 60
> years ago.

Deaths are a piece of the issue, but using unrealistic earnings estimates for asset gains is a much bigger problem.

The higher the earned interest assumption, the lower the present contribution required. Good for states and employers. Bad for employees.

Posted from Android

Lackawanna484 Wrote:
-------------------------------------------------------
> bobwilcox Wrote:
> --------------------------------------------------
> -----
> > If retirees would just die sooner as they did
> 60
> > years ago.
>
> Deaths are a piece of the issue, but using
> unrealistic earnings estimates for asset gains is
> a much bigger problem.
>
> The higher the earned interest assumption, the
> lower the present contribution required. Good for
> states and employers. Bad for employees.
>
> Posted from Android

That really is the crux of the issue. So many pensions are in trouble because of that.

Nathan

Posted from iPhone

A lot of union contracts had 30 and out clauses too.  GREAT if you're an employee, but wholly unpractical and unsustainable.  A lot of those people, like my dad went into those jobs at 18-19 years old and retired in their early 50's.  My dad had his union job for 32 years, and he's already collected 25 years worth of pension and almost free medical insurance plus my mom's medical coverage, and both could EASILY live another ten or more years.  That's a HUGE nut for any pension plan to swallow.

The much bigger "illusion" that every generation after the Baby Boomers will face is retirement at all.  People forget that Social Security started out as "Old Age Insurance."  The "insurance" part was that government actuaries calculated that a relatively small percentage of the population would live much past age 65 back in 1936.  Of course, since then life expectancy has grown into well into the 70-80+ year range, but the retirement age has changed very little until the past few years.  The double whammy was the Baby Boomer bulge in the population--now reaching retirement age in ever increasing numbers, combined with longer life expectancy (though, for various reasons, average life expectancy in the US may actually start trending downward in the coming years).  All of these issues also apply to federal Railroad Retirement, but Railroad Retirement is at least in better shape than most other private pensions--truckers pension plans included.

Most all of the private pensions are in the same boat--longer living retirees are pulling more out of the funds than were put into them to adequately fund them, plus all of the previously mentioned issues compounding the funding problems.

All that said, the biggest wreck is yet to come.  Most all other retirment savings plans, 401k's, deferred compensation plans, etc. require continued appreciation in securities and interest payments to fund what is being withdrawn by retirees.  That means that there have to be "savers" investing in those securities and instruments to maintain their value.  The problem is that a huge part of the younger population can barely even service its debt load--student loans, excessive home loan debt, auto loan debt, credit card debt, etc.--to even stay financially solvent, much less save anything.  When the Baby Boomers get to the point that they are massively liquidating their 401k's, etc. to pay their living expenses--that will really crank up in the next few years--there may be few buyers for the securities being liquidated by institutions in which those retirement plans are invested to pay out to retirees.  At that point, the value of those 401k's, etc. may collapse, causing a full-blown financial panic.

For all of these reasons, the Baby Boomers--and not all of them and not most of them for their full retirement--will likely be the last American generation to enjoy "retirement" as we know it today.  For the subsequent generations, "retirement" may look a lot more like 1890 than 2020--as in "work until you drop." 



Edited 1 time(s). Last edit at 07/26/19 08:49 by WW.

A couple corrections to WW’s post.  Railroad Retirement was not created as a social insurance program, it was established as a pension program for railroad employees.  Also American average life expectancy is declining.  Raising the age for Social Security benefits based on continued increases in life expectancy is questionable.  

Sphogger

WW Wrote
> The problem
> is that a huge part of the younger population can
> barely even service its debt load--student loans,
> excessive home loan debt, auto loan debt, credit
> card debt, etc.--to even stay financially solvent,
> much less save anything.  
> 

A problem faced by more than just "the younger generation".

sphogger Wrote:
-------------------------------------------------------
> A couple corrections to WW’s post.  Railroad
> Retirement was not created as a social insurance
> program, it was established as a pension program
> for railroad employees.  Also American average
> life expectancy is declining.  Raising the age
> for Social Security benefits based on continued
> increases in life expectancy is questionable.  
>
> Sphogger

I agree. Nonetheless, Railroad Retirement is facing the same actuarial problem as Social Security--retirees are living longer than what was comtemplated when the funding mechanisms for the program were established. As for American life expectancy, there are several reasons that it is declining.  Ironically, one of the major health threats for those of Baby Boomer age and older--cigarette smoking--has greatly declined, but has been replaced with new threats that may be even worse--sedentary lifestyles, additional psychological stresses, recreational narcotic use, just to name a few.   The unanswered question is whether medical advances will outpace the harmful lifestyle practices that appear to be negatively impacting life span currently and reverse the average life expectancy decline. 



Edited 1 time(s). Last edit at 07/26/19 14:34 by WW.

At least in Railroad Retirement the retirement age can be raised from 60 to 62 or 63 and help the system.  It's acutally quite healthy, but one never knows. Here's a good video on the subject in case you're interested.

https://www.youtube.com/watch?v=2XOU6eGRSrs