There’s a rumor circulating that Lee plans to cut pension benefits. Retirees are calling the Guild to ask about it.
Here’s the truth: Lee can’t cut our pension benefits. That would be illegal. Even if Lee goes broke, we won’t lose our pensions.
I write a column on personal finance for the Post-Dispatch. Here’s part of a piece on pensions that I wrote last year. I’ve updated the dollar amounts and made a couple of other changes to fit our situation as Guild members.
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Under federal law, private employers can’t take back pension benefits that workers have already earned. But employers do go broke.
In a bankruptcy, companies try to weasel out of pension and retiree health obligations, and courts usually let them.
So in 1974, Congress created a federal agency to insure private-sector pensions. If a pension sponsor goes belly up – as 152 did last year – the Pension Benefit Guaranty Corp. keeps the checks coming.
The federal agency limits its guarantee to $4,488 per month for people 65 years old. That number assumes that the employee is married and opted for his (or her) spouse to get half his pension upon his death. Nobody in the Guild gets a pension that large. The guaranteed amount drops with age, with a 60 year old guaranteed $3,213. Even that amount is bigger than a Guild pension. That’s fine for underpaid reporters like me, but not for airline pilots and corporate muckety-mucks.
The PBGC has its own problems. It can pay its bills for years to come, but it is $26 billion short on its long-term funding needs. If the agency kitty ever ran dry, the betting is that Congress would bail it out, rather than face mobs of angry retirees swinging their canes.
“There’s very little risk that pensioners would lose out, ” says Jeffrey Brown, finance professor and Director of Center for Business & Public Policy at the University of Illinois. “Taxpayers will ultimately be on the hook.”
For private workers, the biggest worry involves pension freezes and terminations. Normally, your pension check grows with your years of service and rising salary over time. In a freeze, you keep what you’ve earned so far but get nothing for pay and service going forward.
As you recall, our leaders in Davenport, having nearly drown the company in debt, torpedoed the stock price, rung up huge losses and demolished the quality of our newspaper through layoffs, decided to compensate for such failures by freezing our pensions in 2010.
However they can’t reduce what we earned before the freeze (and the pension amount still rises with our age as we approach 65)
former board member and local treasurer