Thread: Twinkies

Originally Posted by earcutter

***UPDATE***

Wow Gents: just wow...

If you read today's obscure news you'll find that they were raiding the staffs pensions to keep the company solvent. That's just stealing if you ask me!

More importantly!! For the first time (for me anyway) you hear that that is exactly why the union was putting up the fight!

If that really is the case - and seemingly it is -> the Union was 100% right!!

I read the story and really began to question if more regulation is really wrong! It reeks of the United States government dipping into our social security! Hope the man never goes broke .

Can you point me to the story that says the company was taking money from the pension funds? That's a much different thing than *not contributing to* the pension funds. If you have no money (it appears the folks backing the company here are really the ones who took the loss, the investors, and not the union workers. They were, instead, working and making a product that didn't pay for their demands, and living partially off of the venture capitalist dollars to continue to receive their checks).

I doubt any company took any dollars *out of* a private pension fund, and it is very unlikely that any of the employees bear any risk of not receiving the benefits they accrued.

If the individuals were in a multiemployer type pension, it is more likely that the funds negotiated with the companies to have a reduced or no contribution into the pension fund at the time, because the company wasn't making any money and didn't have it. To spring that back on the employer while outside funding is already paying the way for the employees is disingenuous.

In short, if you can't make enough money to make contributions to a pension plan, why would you expect someone else to pull money out of their pocket to do it for you? I haven't yet seen any suggestion that the company was doing anything other than losing money.

It's too bad they dragged down the teamsters along the way. Everything I've seen from the teamsters shows pretty good business judgement and realistic cooperation and they deserved better than to be dragged down by the bakers.

So get back to why again the bakers were putting up a fight? They were making demands in a company that was already losing money instead of deciding to work with management and figure out why they were losing money and what they'd have to do to *have* the money to make a pension contribution. Again, it appears they were working a subsidized job at the expense of private investors. They aren't the victims here.

Originally Posted by DaveW

I doubt any company took any dollars *out of* a private pension fund, and it is very unlikely that any of the employees bear any risk of not receiving the benefits they accrued.

The 'officers' of the company, executives, CEOs, no better than thieves ..... whatever you want to call them, gave themselves million dollar bonuses.... raises .... A judge in a court of law rescinded those long before the final dissolution of the company.

The pension fund for the teamsters depends on employers contributing the amount they agreed on in contracts which denote that pension contribution as part of the hourly wage paid. By federal law an employer has to have his pension obligations met to a certain extent. I forget the exact terminology. Few do.

The union supports the pension fund through the employee/employer contributions. Without those contributions ...... if every signatory company defaulted there will be no pension for the union members. Remember Enron and Kenny Boy, GW Bush's buddy ?

Interesting. In our evil partially socialist system, pension funds are
a) safeguarded and
b) at all times completely inaccessible to companies for the purpose of withdrawal.

Your system is clearly much better

Originally Posted by Bruno

Interesting. In our evil partially socialist system, pension funds are
a) safeguarded and
b) at all times completely inaccessible to companies for the purpose of withdrawal.

Your system is clearly much better

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.

Originally Posted by JimmyHAD

The 'officers' of the company, executives, CEOs, no better than thieves ..... whatever you want to call them, gave themselves million dollar bonuses.... raises .... A judge in a court of law rescinded those long before the final dissolution of the company.

The pension fund for the teamsters depends on employers contributing the amount they agreed on in contracts which denote that pension contribution as part of the hourly wage paid. By federal law an employer has to have his pension obligations met to a certain extent. I forget the exact terminology. Few do.

The union supports the pension fund through the employee/employer contributions. Without those contributions ...... if every signatory company defaulted there will be no pension for the union members. Remember Enron and Kenny Boy, GW Bush's buddy ?

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 DaveW

Any rank and file employees with benefits in an enron pension plan WILL BE PAID IN FULL because the PBGC guaranteed benefit,

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.

DaveW - you are both right and wrong - Another Pension Bites the Dust: A Lesson from Hostess' Bankruptcy - DailyFinance

"To top it off, while the existing retirees may still be protected by the government backstop, younger Hostess employees aren't so lucky. A 45-year-old, for instance, will be able to get no more than $13,960.20 a year from the guarantee."

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....

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....

I hear you... and feel for you lol!

It's great that we have a resident pension dude on board lol! Thanks for your insights!

I'll re-read your posts later as I am working on a paper/presentation right now - but I hope to learn more! Sweet!

OK, the article is wrong. The figure they provided $13,xxx is representative of the guaranteed amount only for someone who STARTS to receive payments at age 45. It's extremely unlikely that the underlying plan actually allows anyone to do that, and even if it did, it would reduce benefits by so much that the participants early retirement benefit would be no greater than that.

I'm attempting to add a comment to that person's article, but I'm not able to.

But let's be clear here, the person age 45 would still have the exact same $55,000+ limit if they start payment at age 65. Starting payment at age 65 is vastly different than starting at 45. Obviously a dollar payment starting now for an individual age 45 is much more valuable than a dollar payment that doesn't start until 20 years have elapsed.

The reduction that the PBGC uses is a reflection of that. It implies numerically that a payment of $13000 or a little bit more per year for someone age 45 right now is worth the same as a payment of $55000 or a little more starting 20 years from now.

This is the comment that I attempted to post under that article (the site told me it's unable to allow the post because of "techincal problems"...maybe it doesn't like the dollar signs I put in my comment, I don't know. I guess a lot of DBs who get in comment sections to sell fake purses and shoes use dollar signs). At any rate, I guarantee you I am right and the writer is not. Nobody in my profession would make the mistake the writer did.
Chuck - you are incorrect about the PBGC guarantees. What you've provided looks to be an age-adjusted maximum amount for benefits starting at age 45. I don't know what the hostess salaried or non-union hourly plans (if they have such a thing) provide for individuals in terms of retirement, but it is extremely unlikely that anyone is eligible to start at age 45 without some long service requirement.
If a plan allows a 30 and out, and an individual age 48 would be limited to some amount above that $15,000, then that's bad luck. They could, however, wait until a later starting date, as late as age 65, and receive the full unreduced PBGC guaranteed amount if they have a benefit large enough to be covered by that amount and under a benefit structure in place early enough that it was clearly not a game to just increase benefits to take advantage of the limits.
In a more typical example, where a plan allows an individual to retire at age 55 with 10 years of service or some such thing, a participant might have a benefit payable at age 65 of $3000 per month (or $36,000 per year). The PBGC limit may be adjusted to (pick a number out of the air, I'm not going to look it up for this) $22,000 per year for someone who is age 55. You'd conclude that the participant has lost benefits, but that would be without clarifying that at age 55, the plan would also reduce a participant's benefits - typically by something like 50%. So the participant in this case would still receive 100% of their accrued benefit.
It's not the young participants who get nailed in an underfunded plans, it's the ones who have very rich early retirement benefits and those who are very highly paid. *Those* individuals only get paid above the guaranteed amounts if the allocation of remaining assets goes far enough to cover their benefits.