Eastern Railroad Discussion > If CSX went bankrupt...

After Delta Airlines and Northwest Airlines announced filing for Bankruptcy Protection...I overheard a guy saying he felt they are going to be doing this stuff in order to get out of employee pensions for retirees.

If that is indeed the case...would the railroads be able to do such a horrible thing like that to avoid their retirees? Also, if they did declare bankruptcy...would the employees be SOL or are they protected?

I know GM is facing hardships with pensions as well...

Thanks for any insight,
Tony

I don't have an answer to your question but it's kind of ironic that the bankruptcy laws were changed recently to make it much more difficult for individuals to declare bankruptcy yet it seems to be getting easier for companys to declare.

rfprr

CSX does not have a pension for its employees, unless you are management, and I beleive they have got rid of their pension plan as well. However, railroad employees in the US are covered under the Federal Railroad Retirement Board. We don't pay into Social Security like the common folk. As long as the railroads keep hiring new employees and they pay into railroad retirement everyone will get a pension. That is if they stay long enough to get it.

I think that the new Bankruptcy law kicks in October 1st. It may only pertain to personal bankruptcy, I'm not sure.

The Railroad Retirement Board is a governmental / railway management agency which administers the benefit plans for most rail employees.

Here's its website, and here are the actuarial reports which back it up.

http://www.rrb.gov/act/statsindex.html

It's similar to social security, in that current deposits pay current benefit distributions. There's no giant trust fund here, either, although the account may run a surplus or deficit based on what's coming in and going out right now. And, like SSI, the benefit payments are partly indexed, while the contributions are set independently.

Actually October 20th. It pertains to both personal and business, though it surprised me the current admistration included the business changes. I wouldn't be shocked to see some sort of delay or exemptions from the Katrina fallout. Some of the changes are needed, though there should be some sort of legislation forcing the credit card companies to be held more accountable for allowing people to rack up debt like they do. I doubt that will happen with the current Rhino (Republican in name only) GOP admistration and their free spending ways. Sorry for the social commentary, just a disillusioned young republican.

I would expect GM to file for bankruptcy in the near future with Ford quickly following. The last time I looked GM has over $12 billion in pension liabilty hanging over their heads. Factor that with their junk bond rating, increasing interest rates and losing at least $1,200 on every vehicle built and Chapter 11 looks like the only viable solution. Plus the $1,200 per vehicle was before they started the employee price program. You know the boys in Detroit are sweating out the next incentive program since the employee pricing is set to end this month.

Mark


chuchubobnv Wrote:
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> I think that the new Bankruptcy law kicks in
> October 1st. It may only pertain to personal
> bankruptcy, I'm not sure.

CSX is in good financial health, so there is no concern there. They make piles of money in spite of themselves.

The RICO Act is a handy tool, also.

...who would the knee-jerk bashers have to complain about.

Your generation will be paying for all us old farts for years to come! lol

cando2716 Wrote:
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> CSX does not have a pension for its employees,
> unless you are management, and I beleive they have
> got rid of their pension plan as well. However,
> railroad employees in the US are covered under the
> Federal Railroad Retirement Board. We don't pay
> into Social Security like the common folk. As
> long as the railroads keep hiring new employees
> and they pay into railroad retirement everyone
> will get a pension. That is if they stay long
> enough to get it.

Or if they live long enough to get it.

I think the CSX management pension is still around, and RR retirement isn't being tampered with by you know who at the present.

It wouldn't matter if CSX (or any other road) went bankrupt as far as causing RR Retirement pensions to be stopped for their employees. Remember NH, PC etc.? Those guys still got the pensions they earned even though their roads went bankrupt.

GrampaFrosty Wrote:
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> Your generation will be paying for all us old
> farts for years to come! lol


Just like we paid for the old dinosaurs when we were the new hires.

Anyone that works for the railroad more than 5 minutes after his/her 60th birthday should seek counseling, both financial and mental.

Unless you do not have your 360 months of service in. I agee. I know when I am 60 I will have more than enough of the circus!

"just a disillusioned young republican. "

What took you so long?! ;)

MHF

The PBGG has already said it would not, repeat WOULD NOT allow DL and NW to forgo pension payments. They learned a lesson by letting UA slip thru their fingers, therefore DL and NW MUST continue to contribute.

csxengineer Wrote:
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>
> i may be wrong but i don't think the PBCG even
> insures railroad retirement?
>
>

I don't believe PBGC insures the railroad contributory plans, either. Nor municipal employee plans.

One fallacy many people have is that the PBGC picks up the payment obligation in plans that have gone belly-up. Definitely not true, as many retired steelworkers or airline employees will confirm. You get an adjusted, and usually lower, payment based on the PBGC formula, not on your former employer's plan rules.

The formula is less generous than many negotiated plans, so payment cuts are likely for some retirees. And, retiree medical or drug benefits aren't covered at all.