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Old 12-22-2009, 05:02 AM
 
12,869 posts, read 14,016,297 times
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Mish's Global Economic Trend Analysis: Beware the Taxpayer Bailout of Underfunded Teamsters Pension Funds
Multiemployer union pension alliances might sound innocent enough, but consider what that actually means. Moody's Investors Service recently warned of a vast underfunding problem with multiemployer pensions. Many employers fear being shackled into them. Even though the funds are controlled by unions, employers are liable not just for their own employees, but for every worker in the plan regardless of how the plan is managed or mismanaged.

The so-called last-man-standing rule holds that if every other company in a multiemployer pension plan goes bankrupt, closes or pulls out of the plan, the one survivor is responsible for every single employee covered by the plan, even those who never worked for him. UPS paid $6.1 billion in withdrawal fees just to escape the Teamsters Central States pension fund.

Earlier this year the Teamsters were required to send out a letter to participants of the Central States pension alerting them that the plan was in "critical status" - funded at 65 percent or less.

Not wanting to wait for a PBGC bailout, Mr. Pomeroy proposes putting the taxpayer on the hook now. In a stark departure from the traditional role of PBGC, the draft bill states that "obligations of the corporation that are financed by the [fifth fund] shall be obligations of the United States." For the first time, PBGC liabilities will be borne by taxpayers. The fifth fund could make available billions of dollars to prop up union pensions. The bill does not include a statutory limit for how much taxpayer money could be shoveled into failing funds.


Taxpayers: The Last Man Standing

Pomeroy's Ponzi scheme, should it pass, would ultimately result in taxpayers being the last-man-standing in yet another massive, unwarranted bailout.

call or write your senators today, who will probably IGNORE YOU, and then VOTE THEM OUT OF OFFICE

Last edited by floridasandy; 12-22-2009 at 05:11 AM..
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