Thread: Twinkies

Go to the following link. It pretty well dismantles the myth about greedy unions.

David Macaray: Labor Union Unfairly Blamed for the Hostess Meltdown

It doesn't really do anything to address the real issue, instead it just looks to pin the blame on management. It's no different than articles that look to pin the blame only on the union, it's just biased in the other direction. If you can't see that, it's only because it comes to the conclusion you want it to.

It was an overmature company selling a product that couldn't pay for its operating expenses.

There is a lot of blather floating around about how they should've just changed their product line, or how they made gazillions of dollars in the hedge funds running it into the ground. What will their total return be? You'll have to excuse me if I don't trust a playwright to have any concept about the actual underlying numbers.

It looks to me like the brands were bought by hedge funds and venture capitalists because they weren't viable enough to be publicly owned. Once a company can't sustain itself on public ownership, it's either going up or down, it's not staying the same.

As far as changing the product line, who is going to do that? What stake did the unions have in changing the product line, how did they offer to help and streamline their side of the business to make it more competitive? They gave concessions, but we don't know where the starting point was. They clearly didn't give concessions great enough to keep the business operating when other participating unions did.

It (hostess) was a business that was destined to be smaller or different, and nobody did anything to try to make it either of those. The blame goes all around to everyone, playwright opinions notwithstanding.

Originally Posted by thebigspendur

That is a very common tactic. Outfits do that all the time.There is no law saying a private company can't go into the pension funds and remove the funds especially in situations where the employees contribute nothing to the plan or if they do as long as the employee contributions aren't touched. if they are that becomes a criminal matter.

One of the reasons many of the state and local govt pensions are underfunded is because the govt is supposed to match the weekly deductions and many simply stopped doing that years ago. The Federal Govt commonly raids the pension funds whenever there is a fiscal crisis and removes billions with the promise to make it whole again.

Yep......Happens all the time. They write a new law and the money goes out. They took billions from my Pension fund when it was 103% funded. Now that they have to pay it back, the are villainizing police, fire and teachers.

Originally Posted by DaveW

The same is the case here. Pensions are paid to rank and file employees, regardless of whether or not a company defaults and regardless of whether or not they were fully funded. Jimmy just has no idea what the rules are.

Private pensions are completely off limits in terms of withdrawing money, and they are not subject to creditor claims. They are at least as well protected here as they are in belgium. The ONLY threat to pension dollars for rank and file employees is a status change of the money in the pensions by the government or a change in the rate of taxation of distributed benefits.

Future payments are not protected and the companies make promises they don't keep.

Originally Posted by DaveW

Now you guys are completely off in the weeds and have no clue what you're talking about. But most of you have picked a conclusion long ago, and you have no concern with reality.

IF there was a contract in place (not every company contributes or contributes at the same rate to a multiemployer pension fund, the contracts are negotiated between the funds/locals and the employers). IF the company had a contractual obligation to make an hourly contribution to the pension fund on behalf of the employees and couldn't do so because it didn't have the money to, that's a delinquent contribution. It happens.

The benefits the employees have in the plan are payable to the extent they are earned and covered by the PBGC, a quasi government agency that would be funded by taxapers if it itself went insolvent. Enron and your political wishes of making something irrelevent fit this have nothing to do with reality. People in enron lost their money because they had it in their 401ks and stock purchase plans, NOT because they lost defined benefit pensions. Any rank and file employees with benefits in an enron pension plan WILL BE PAID IN FULL because the PBGC guaranteed benefit, regardless of the funded status of their plan, will pay nearly $55000 in annual guaranteed benefits to an age 65 retiree in a PENSION plan. The guarantee is lower for a multiemployer plan because they have lower premiums and guaranteed levels, but it is still a substantial amount, and a long -service employee would still under any circumstance at all be able to get $1000+ per month from a completely broke pension plan plus social security.

IF every singatory company defaulted in fund the bakers are in, the plan would go to the PBGC and members would still be paid at the PBGC guaranteed benefit rate, even if there was $0 in the fund. What's more likely is that employees would be paid at the guaranteed rate and any excess dollars left in the trust would be allocated to accrued benefits above the guaranteed amounts. Whether or not current contributions are made by an employer over a period of a year or two has NO EFFECT on the funding level for past benefits in the long term, nor does it have any effect on whether or not a given member will be paid.

You guys really need to know what you're talking about before you start making assertions If something was done wrongly in the bankruptcy process, the judge will take care of it. It doesn't entitle anyone to making up complete falsehoods. If the company couldn't afford to make pension contribtions when it was already living on borrowed dollars, the fact that the remainder of the company wants to incent key people there who can actually assist in selling the remains of the business isn't comparable unless the dollars were both contracted and are of the same magnitude. I would imagine if there were delinquent contributions, they were at levels many many times the bonus levels.

Originally Posted by JimmyHAD

If I'm not badly mistaken they won't get paid IN Full ...... they'll get a reduced percentage of the benefit agreed on in the contract. I'm sure you'll correct me if I'm wrong.

Very reduced rate.

Originally Posted by DaveW

I work on pension plans for a living. Let's just air that out. Pardon my overreaction, I just see so much stuff all the time that isn't correct or even close (I even hear it on the bus, etc), and I already have bad manners to start off with. There's so much misnformation out there (and not talking about pensions, just in general) that I always wonder with all of the efforts that we all go through to spread information around, could we spread half as much information around and spend the other half of the time understanding what it is we're actually spreading.

The $55,000 or so limit was in reference to a situation like enron, which is a single employer plan. The limits are different for single employer and multi-employer plans. Why they are structured differently is probably a matter of lobbying and legal influence.

Multiemployer plans get coverage for 100% of the first $11 per year of service per month and 75% of the next $33 per year of service per month. They also pay much lower premiums to the PBGC. However, the bakers are likely part of a fund that involves a lot of other employers, and what really would happen, in theory, in a termination (which is extremely rare for multiemployer plans) is that the fund would have less money than *all* of the accrued benefits but more money than the guaranteed benefits (the monthly comment above), so participants in general will get something between full accrued benefits and the guaranteed amounts.

In a single employer plan, like Enron, the PBGC limit applies, and is age-adjusted for the starting payment date. Pardon me while I post this and go read that article quickly, I think I have a good idea where it will be incorrect and as soon as I confirm it, I will do so in another post....

DaveW, I understand your posts. My one an only point is that companies negotiate pay and benefits for their workers. To the worker, it really makes no difference if the company "raids" the pension fund or just stops paying. Either way, when the employee gets to this point there is no money left in the pension fund and they get a small percentage of what they NEGOTIATED with the company. This is all done during the time the salaries for the select few are in the millions.
Some folks go 30-40 years working for a company, paying their share so when they get to the proper age they can enjoy their retirement. As you arrive at this point your told the pension system is defunct because the company stopped paying their share of your negotiated benefit. The company execs got paid millions and you get to go home broke.
This is a scenario being paid out all over this country. But not to worry, with the demise of unions this won't happen anymore because we will all be working for minimum wage, no benefits and long hours until we drop dead.

Originally Posted by Mvcrash

DaveW, I understand your posts. My one an only point is that companies negotiate pay and benefits for their workers. To the worker, it really makes no difference if the company "raids" the pension fund or just stops paying. Either way, when the employee gets to this point there is no money left in the pension fund and they get a small percentage of what they NEGOTIATED with the company. This is all done during the time the salaries for the select few are in the millions.
Some folks go 30-40 years working for a company, paying their share so when they get to the proper age they can enjoy their retirement. As you arrive at this point your told the pension system is defunct because the company stopped paying their share of your negotiated benefit. The company execs got paid millions and you get to go home broke.
This is a scenario being paid out all over this country. But not to worry, with the demise of unions this won't happen anymore because we will all be working for minimum wage, no benefits and long hours until we drop dead.

That's an exaggeration. It does make a difference if the company goes back and takes money for prior benefits out of a plan. First, it's illegal and second, the plan would, even if it was legal, have that much less money in it to pay benefits. Not making future contributions out of insolvency is different than doing that AND taking half the assets out of a plan.

As far as the likelihood of multiemployer funds having zero benefits in them, you have to show me the long list of examples of funds that have gone insolvent. We may see more of them in the future, but to date it just hasn't happened. The general issue causing insolvency risk now is not employers not contributing, it's the market not returning.

If an employer doesn't make contributions on behalf of a participant, then the participant doesn't earn the benefit, and the funds that were there to fund the prior accruals are still there. How long does this happen in the grand scheme of a benefit accrual - 1 or 2 years out of 40? It is enormously different than the scenario where someone actually goes into the funds and takes money out.

The comments linked go back to lumping public and private pensions together, you can't make general statements as they're not remotely the same, neither are the laws, and neither are the benefit protections.

The scorched earth comment about everyone going to minimum wage is just talking points memo fluff. The reality of it is, individuals going forward are going to be more responsible for figuring out what makes them marketable. That's the way the economy will work, and while it is unjust to some, it's not unfair or unjust to most. It is more unjust to determine what slice of someone else's wallet you want to have without doing something of equivalent value in exchange.

The only way any of this is going to change is more unions getting a slice of the businesses they operate in. Encourage the members to own stock, encourage the members to vote their shares without doing it as an activist interruption of legitimate meetings. Participate in the profitability and longevity of a business in a constructive way, and if the members feel that the company is really wronging them, put up member dollars to buy a bigger and bigger slice of the business.

But don't particpate in a business and ignore its viability and then cast stones. That's the easy way out, and it's disingenuous.

I work with plenty of unions that do just what I just said, they are intensely involved in examining the financials and keeping the business going. I live in a union town where they've seen what happens if you ignore reality. It's not like it can't be done, some people just learn the hard way.

Originally Posted by DaveW

That's an exaggeration. It does make a difference if the company goes back and takes money for prior benefits out of a plan. First, it's illegal and second, the plan would, even if it was legal, have that much less money in it to pay benefits. Not making future contributions out of insolvency is different than doing that AND taking half the assets out of a plan.

As far as the likelihood of multiemployer funds having zero benefits in them, you have to show me the long list of examples of funds that have gone insolvent. We may see more of them in the future, but to date it just hasn't happened. The general issue causing insolvency risk now is not employers not contributing, it's the market not returning.

If an employer doesn't make contributions on behalf of a participant, then the participant doesn't earn the benefit, and the funds that were there to fund the prior accruals are still there. How long does this happen in the grand scheme of a benefit accrual - 1 or 2 years out of 40? It is enormously different than the scenario where someone actually goes into the funds and takes money out.

The comments linked go back to lumping public and private pensions together, you can't make general statements as they're not remotely the same, neither are the laws, and neither are the benefit protections.

The scorched earth comment about everyone going to minimum wage is just talking points memo fluff. The reality of it is, individuals going forward are going to be more responsible for figuring out what makes them marketable. That's the way the economy will work, and while it is unjust to some, it's not unfair or unjust to most. It is more unjust to determine what slice of someone else's wallet you want to have without doing something of equivalent value in exchange.

The only way any of this is going to change is more unions getting a slice of the businesses they operate in. Encourage the members to own stock, encourage the members to vote their shares without doing it as an activist interruption of legitimate meetings. Participate in the profitability and longevity of a business in a constructive way, and if the members feel that the company is really wronging them, put up member dollars to buy a bigger and bigger slice of the business.

But don't particpate in a business and ignore its viability and then cast stones. That's the easy way out, and it's disingenuous.

I work with plenty of unions that do just what I just said, they are intensely involved in examining the financials and keeping the business going. I live in a union town where they've seen what happens if you ignore reality. It's not like it can't be done, some people just learn the hard way.

Your argument sounds pretty compelling going forward. The issue is what happens to those folks who are now finding their pockets picked. You may work with pension plans and I applaud your good work.
The fact is that we will never agree because we come from different worlds. My world was filled with employer abuse, empty promises and broken contracts. I started paying my 9% of my salary into my pension plan 8% into Social security, took less money on a yearly basis to have medical benefits, and worked two jobs to pay my bills. I worked around the clock in the worst weather and dealt with folks trying to hurt you, yours, mine and Me. I did it because I made a deal with a state which made promises and signed legally binding contracts. I did it for going on 30 years now They invested my money and also used it to plug budget short falls. No one ever thought they would have to pay it back and since they were only in office for 4-8 years, they did no care. It would be "a problem for the next guy." Now that markets fell, the budgets ballooned and payments need to be made, they decided to change the law and reduce benefits.
Seems to be happening all over the country. The only law they should pass is that NO ONE can touch money earmarked for PENSIONS or money once it is in the fund, PRIVATE OR PUBLIC.

The pension system I payed in to at one time, not long ago, was 103% funded. Besides taking money to fill budget shortfalls, they stopped paying into the fund as well. Now it is 30 Billion in the hole and they want to reduce benefits. I don't know how you find that to be OK. I think it sucks.

Unions were a direct result of company abuses of workers. Civil Service, Teacher Tenure and worker contracts all grew from abuse of the worker. I guess we'll see what happens when we turn back the clock.

What are you in, a teacher's pension? Every fund is less well funded than it was several years ago, and state and municipal plans aside, a lot of contribution increases have been made to plans.

As far as my industry goes, our salaries are down, too, so are our benefits. I don't even have a pension, I contribute to a 401k and a roth, but because of what I know, I contribute a huge part of my salary and live below my means. EVERYONE should do that until their retirement is funded, but people do it backwards.

The fact that your fund is $30B in the hole is probably related to lack of market returns. The real answer for how that could have been prevented has nothing to do with the contributor, it has to do with the benefit levels.

Here's an example of what I mean by that, in Dutch pension schemes, the plans are overfunded in general, by design. As the plan stays overfunded, the benefits are incrementally increased. They start off with a lower benefit than you would in your plan, but if they reach market return expectations, then their benefits are adjusted upwards. If the returns aren't met, then their benefits are NOT adjusted up the same amount, or in some cases, not at all.

Your implication that we'll go back to the way things were in the 1880s is just false, the law is completely different now than it was then. Unions, post-war wage controls and a whole host of things has set up the benefits system we have now, we won't be going back to the 1880s. I also don't think unions are going to go away, but I absolutely believe that the public unions bargaining with governments are a potential problem because there really is no legitmate stakeholder represented against the union side. The taxpayers aren't properly represented, if the government gives away too much, those making the decisions don't stand to lose anything financially.

At any rate, your union reps could've requested a more conservative investment scheme which would've required lower benefits, or a setup like the Dutch pension system, but nobody wanted to do that because they wanted to present members with the largest benefit (from the union rep side) at the lowest possible cost for the large benefit (from the taxpayer side) without having any ability to adjust for risk related to past benefits.

The assertion that someone is responsible for a change from 103% funded to what the plan is now, other than for amounts that were actually taken OUT of a public fund is also false. All plans, public and private are in the same situation, as are individuals with 401ks, they just don't know it because they have no concept that their flat 401k account funds a lower periodic benefit as time goes by and the account doesn't earn anything.

There is no free lunch, and you can't just paint the picture that you should live a life without any risks at the expense of other people.

No law should ever be passed that makes a codified requirement of future pension contributions at someone else's expense. All you do by saying that is say you should have a legal right to crush the private sector, the sector that actually grows the economy and makes any of your benefits possible. I personally would have no issue with a law that said you couldn't go back to a plan that was funded below a certain level (say 125%) and use the monies for something else.

Everything is tied together. Without police, military, infrastructure, there is no economic stability. Without economic growth and prospects for it, there is no economic stability for police, military and infrastructure. When the entire economy takes a hit, you have to, too, even if it's on future benefits only, or you're just accelerating your own benefit demise.

If you can't get to the point where you can manage numerical reality without pointing fingers, you'll never solve the problem.

I work on both sides of the table, by the way. I don't have a bias other than I think both sides should abide by numerical reality. It's time to make changes that make that mandatory and protect accrued benefits to the point they can be protected without taking a huge chunk out of an unrelated third party.

Originally Posted by Cangooner

It's not actually something I could say I 'know', but back when I was an undergrad, one of the profs in my honours program gave us a bunch of Machiavelli in one of our reading courses. But he started with his other works before assigning The Prince and suggesting that we approach it embracing the possibility that it was a satire. It has never been proven, but it's a really interesting theory, and one that makes an awful lot of sense when his other works are considered as well. The Prince is really out of character for him when the rest of his writings are considered. It stands out like a Twinkie in a Ding Dong factory. (How's that David?)

You know - I am convinced that history majors are the most interesting people in the room lol!!

Dave

Sometime public and private pensions are intertwined. I have a copay defined benefits pension and there is a formula for calculating the company pension amount you are entitled to on retirement. There is also a second formula for a bridging clause that you will receive until such time as you qualify for the federal pension, in our case the CPP. if you take retirement before age 65. So in some countries under some plans a government pension is taken into consideration in setting up the copay company pension plan.

Bob

Let's get down to what the real issue is here, money. The Democrats support the unions because 90% of the money the unions spend on politics, advertising and contributions, goes straight to the Democrats.

If the unions can't force people to join and pay dues, the Democrats get less money.

I just heard a report that right to work states have higher wages and higher employment than states without right to work.

Southern states right now are gaining in population while Northern states are declining. Dallas is the #1 place for population growth right now.

I have an Aunt that was a lifetime employee of the phone company. She was promoted steadily over the years and retired as a Purchasing agent. She was as dumb as a sack of rocks. "Let the other people do the work. I'm just going to sit back and collect my paycheck."

The truth is she was too stupid to even begin to do the job even after training, but was promoted purely on seniority. This makes sense? This is the problem with unions.

Originally Posted by DaveW

What are you in, a teacher's pension? Every fund is less well funded than it was several years ago, and state and municipal plans aside, a lot of contribution increases have been made to plans.

As far as my industry goes, our salaries are down, too, so are our benefits. I don't even have a pension, I contribute to a 401k and a roth, but because of what I know, I contribute a huge part of my salary and live below my means. EVERYONE should do that until their retirement is funded, but people do it backwards.

The fact that your fund is $30B in the hole is probably related to lack of market returns. The real answer for how that could have been prevented has nothing to do with the contributor, it has to do with the benefit levels.

Here's an example of what I mean by that, in Dutch pension schemes, the plans are overfunded in general, by design. As the plan stays overfunded, the benefits are incrementally increased. They start off with a lower benefit than you would in your plan, but if they reach market return expectations, then their benefits are adjusted upwards. If the returns aren't met, then their benefits are NOT adjusted up the same amount, or in some cases, not at all.

Your implication that we'll go back to the way things were in the 1880s is just false, the law is completely different now than it was then. Unions, post-war wage controls and a whole host of things has set up the benefits system we have now, we won't be going back to the 1880s. I also don't think unions are going to go away, but I absolutely believe that the public unions bargaining with governments are a potential problem because there really is no legitmate stakeholder represented against the union side. The taxpayers aren't properly represented, if the government gives away too much, those making the decisions don't stand to lose anything financially.

At any rate, your union reps could've requested a more conservative investment scheme which would've required lower benefits, or a setup like the Dutch pension system, but nobody wanted to do that because they wanted to present members with the largest benefit (from the union rep side) at the lowest possible cost for the large benefit (from the taxpayer side) without having any ability to adjust for risk related to past benefits.

The assertion that someone is responsible for a change from 103% funded to what the plan is now, other than for amounts that were actually taken OUT of a public fund is also false. All plans, public and private are in the same situation, as are individuals with 401ks, they just don't know it because they have no concept that their flat 401k account funds a lower periodic benefit as time goes by and the account doesn't earn anything.

There is no free lunch, and you can't just paint the picture that you should live a life without any risks at the expense of other people.

No law should ever be passed that makes a codified requirement of future pension contributions at someone else's expense. All you do by saying that is say you should have a legal right to crush the private sector, the sector that actually grows the economy and makes any of your benefits possible. I personally would have no issue with a law that said you couldn't go back to a plan that was funded below a certain level (say 125%) and use the monies for something else.

Everything is tied together. Without police, military, infrastructure, there is no economic stability. Without economic growth and prospects for it, there is no economic stability for police, military and infrastructure. When the entire economy takes a hit, you have to, too, even if it's on future benefits only, or you're just accelerating your own benefit demise.

If you can't get to the point where you can manage numerical reality without pointing fingers, you'll never solve the problem.

I work on both sides of the table, by the way. I don't have a bias other than I think both sides should abide by numerical reality. It's time to make changes that make that mandatory and protect accrued benefits to the point they can be protected without taking a huge chunk out of an unrelated third party.

I am not in a teachers fund rather, a Police fund. The markets did not take the 30 billion, the State did. They did this without my permission.

I'm not going to go into the entire facts of the NJ State Police and Fire Pension system, suffice to say:

The Markets were already down when the fund was at 103%
Our fund was at 103% due to the fact that we just don't collect a pension long. Cops are dead at age 57, within 7 years of retirement. This is a fact which you can easily confirm.
Another fact is the fund was fully funded when the State took the money you can simply look it up on line. They filled the budget gap.
Nothing I said is false in regard to NJPFRS.
You don't think things will go back to the 1880's and I agree. They won't change the fire codes so folks get burned alive (Triangle fire) trapped in a building working 18 hours days. So when you speak of the safety regulations, I agree. When you speak of labor regulations, I thing your wrong. "Do more with less" is already a fact of life. The "It is what it is" attitude is just that of management saying if you don't like it, there are ten more like you out there who don't have a job.

Another point about your private pension fund is simply I was not given a choice. I has to pay 9% into PFRS and 8 percent into SS. They were supposed to match the payments into PFRS but since the fund was fully funded, the state passed a law which changed that and allowed them to skip the payments. At the same time they raided the funds.

I hope no one one takes anything from your 401Kor pension funds, but if they do, you'll understand how I feel.


Like I said, we come from two different worlds.