Company held pension plans....I say they are a gift... The gift they can taketh away.... If they are offering to give it to us to roll over in a 401K, b/c they no longer want to fund it, how bad can that be?????
I say, the unions can fight it, they may win the battle, but they (we) will lose the war.....
Let me know, use fake names, I don't care...
can companies file bankrupt if they don't, or can't pay????
I say they can, and will....
I don't want to be 65, and find out the pension I have counted on my entire life is a "BUST".....
Bernanke Raises Prospect of 'Debt Spiral'
Warning Could Bolster
Attempts to Overhaul
By GREG IP
January 19, 2007; Page A2
WASHINGTON -- Federal Reserve Chairman Ben Bernanke warned that rising health-care and Social Security spending could create a "vicious cycle" of rising debt and interest payments and an eventual fiscal crisis.
MORE ON THE FED
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WALL STREET JOURNAL VIDEO
Watch Federal Reserve Chairman Ben Bernanke's opening remarks to the Senate Budget Committee. (15:20)
QUESTION OF THE DAY
What do you think of Fed Chairman Bernanke's dire warnings on the budget deficit?Though Mr. Bernanke lacks the stature of his predecessor, Alan Greenspan, his strong language, coupled with what appears to be a growing respect for his views from lawmakers in both parties, could add impetus to efforts to overhaul entitlement programs, principally Social Security, Medicare and Medicaid.
They currently amount to almost half of federal noninterest spending and 9% of gross domestic product, or the value of all goods and services produced in a nation. The Congressional Budget Office, assuming no change in the programs, extension of Mr. Bush's tax cuts and continued moderate growth in health-care spending, projects that will rise to 75% of spending and 19% of GDP by 2050.
Mr. Bernanke's advice, delivered at a hearing of the Senate Budget Committee yesterday, comes days before President Bush's State of the Union address and weeks before his 2008 budget request. In the first six years of his presidency, Mr. Bush expanded Medicare significantly while cutting taxes repeatedly. He is seeking to preserve those tax cuts in the face of a Democratic-controlled Congress, while seeking -- through Treasury Secretary Henry Paulson -- to revive an overhaul of Social Security.
Since taking office last year, Mr. Bernanke has met extensively with members of both parties, and the outreach appears to be paying off. Budget Committee Chairman Sen. Kent Conrad of North Dakota yesterday thanked Mr. Bernanke for insights he provided over lunch a few weeks ago. "You've sent a very clear message and one that I hope people are paying close attention to," Mr. Conrad said. The panel's senior Republican, Judd Gregg of New Hampshire, called Mr. Bernanke's testimony "a clarion call."
See the expanded online version of Washington Wire. The Journal's Washington bureau updates the Wire during the day -- every weekday -- with analysis, news and buzz from inside and outside the Beltway.The bipartisan praise also reflects the fact that Mr. Bernanke's diagnosis was generally uncontroversial. While that protects the Fed's reputation for political independence, it may limit Mr. Bernanke's impact on the fiscal debate. Mr. Greenspan was influential in part because he made specific recommendations, such as the passage of tax cuts in 2001. Democrats often cited his support for Paygo -- a budget rule meant to keep tax cuts and new entitlement programs from boosting the deficit -- in making it a key plank in their fiscal platform.
Mr. Bernanke steered clear of specifics on entitlement overhaul in his testimony and anything that could be construed as criticism of President Bush, for whom Mr. Bernanke previously served as an adviser. Despite senators' praise, it is unclear whether his advice will have much direct impact.
The Fed chief noted that last year's budget deficit, spending and revenue were, as shares of GDP, close to averages that have prevailed since 1960. That is a point the White House often makes to deflect charges that its tax cuts have led to dangerously large deficits. Mr. Bernanke said this was the "calm before the storm." Spending on Social Security, Medicare, and Medicaid are about to ramp up, he said, as the population ages.
While breaking no new ground, Mr. Bernanke's testimony was notable for its emphasis on the consequences of a rising national debt -- the sum of all annual budget deficits -- rather than the annual deficit alone. The debt, he noted, would reach almost 100% of GDP by 2030 according to the Congressional Budget Office, a level previously reached only during World War II. The annual interest on that debt would be 4.6% of GDP, triple the current level.
"A vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits," he said. Similar "debt spirals" have contributed to financial crises in other countries, a subject Mr. Bernanke studied as an academic. "Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both," he said.
Mr. Bernanke didn't predict -- as more pessimistic analysts have -- that such a crisis would entail sharply higher interest rates or a sharply weaker dollar. Still, he noted higher debts would divert capital from growth-enhancing investments and funnel more of Americans' income to foreign bondholders. This will "have an effect on the vibrancy, efficiency and growth rate of our economy, which will be palpable," he said.
Mr. Bernanke took office promising to be less outspoken on fiscal policy than Mr. Greenspan. In his initial appearances before Congress, he irritated some legislators by refusing to comment on specific topics. Yesterday's appearance suggests he has refined his approach. Asked a year ago about restoring Paygo, he said the Fed chairman "should not be involved in making specific recommendations about [Congress's] internal decision-making process." Asked the same question yesterday, he said, "I don't really have the expertise to advise on [those] types of rules."
Bernanke: Baby boomers threaten economy
Fed chief says failure to deal with aging population could hurt economy.
January 18 2007: 3:14 PM EST
WASHINGTON (Reuters) -- Federal Reserve Chairman Ben Bernanke bluntly warned the U.S. Congress Thursday that failure to act soon to deal with the budgetary strains posed by an aging U.S. population could lead to serious economic harm.
"We are experiencing what seems likely to be the calm before the storm," Bernanke told the Senate Budget Committee as he acknowledged projections that the U.S. budget deficit could hold steady or even narrow in the near-term.
Fed chief Bernanke warns the financial strain of the aging population could imperil the economy if Congress doesn't act soon.
Costs of programs like Medicare and Social Security are set to soar as more Baby Boomers retire.
Eye on government
Social Security debate: It's back
Reforming the most popular entitlement program is once again on a lot of lips these days. But whether that translates into meaningful action is unclear. (more)
Bush aims to balance budget by 2012
President to propose five-year plan to Congress that would balance books, make tax cuts permanent. (more)
"However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost," he added, citing worrisome long-term projections on the cost of programs such as Social Security and Medicare.
Dream retirement: How to achieve it
"The longer we wait, the more severe, the more draconian, the more difficult the adjustments are going to be," Bernanke cautioned as he answered questions before the panel.
The Fed chairman did not discuss the outlook for interest rates in his testimony, the first he has delivered since Democrats took control of Congress after November elections. He is expected to testify on Fed policy on Feb. 14-15.
Bernanke's full testimony
Bernanke also hewed closely to a previous pledge to remain neutral in Washington budget policy debates, steering clear of specific advice on how Congress might meet or lower the projected costs of retirement and health-care programs even as he warned of the risks of inaction.
"Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the administration, and the American people," Bernanke said.
Bernanke cited projections by the Congressional Budget Office that showed spending on entitlement programs would reach about 15 percent of U.S. gross domestic product by 2030, nearly doubling today's levels, a size he said risked fueling an ever-growing mountain of debt.
"A vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits," Bernanke said.
"Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both," he added.
Expert advice on retirement
The Fed chief said whatever budget decisions were taken, tax rates would need to be set at a level that achieved "an appropriate balance of spending and revenues in the long run."
Bernanke said advocates of lower taxes would have to accept lower spending on entitlement programs. Likewise, proponents of more-expansive government programs must recognize the need for higher taxes brought about by higher spending, he added.
"Unfortunately, economic growth alone is unlikely to solve the nation's impending fiscal problems," he said.
President Bush has also warned of the risks of inaction but a plan he offered to shore-up Social Security by allowing workers to invest retirement accounts in stocks and bonds was rejected by Democrats, who argued it would undermine retirement security.
Trustees for the retirement program said last year Social Security would exhaust its assets in 2040, while the trust fund for Medicare, which covers retiree health-care costs, would run dry in just 12 years.
Stocks fall on Bernanke comments
By MADLEN READ, AP Business Writer Thu Jan 18, 10:33 AM ET
NEW YORK - Wall Street turned lower Thursday after U.S. Federal Reserve Chairman Ben Bernanke worried investors by warning that the U.S. fiscal house is in disarray and could lead to economic weakness.
Bernanke's morning testimony to the Senate Budget Committee called for fiscal responsibility and a revamping of Social Security and Medicare. Without changes, the economy could be in danger, he said.
"If early and meaningful action is not taken, the U.S. economy could be seriously weakened," Bernanke said in his prepared comments
The urgent tone of Bernanke's speech was in contrast to positive economic data released Thursday by the Labor Department, which showed consumer prices rising at a slow pace, jobless claims at an 11-month low, and an increase in housing construction
It has been an on going issue about these Company Pension Plan...but the Federal Gov't wants it to be intact because most Canadians are not saving for retirement and it is the only way to have them have some sort of retirement funds...I talked to a Federal M.P. about 6 months ago and this was a major concern as many Canadians will be retiring in the next 20 years ..including me lol..so they are watching how heavy it will fall on the Federal Budget etc..if it is too heavy they will start taxing higher on CPP..it is the reason why they are going up.
Corporation say it is a liability but I don't see the point as it is all a tax deductible expense for them also..as long as they are profitable I don't see why they think it is bad for them.
The Alberta Gov't should be happy with the Corporation Pension Plan as it will relieve both Gov't from tax increases etc..
US Pension Agency Reports $18.1 Bln Deficit For FY2006
WASHINGTON (Dow Jones)--The Pension Benefit Guaranty Corp. says its deficit for fiscal 2006 is nearly $5 billion smaller than the agency's shortfall during the year prior.
The PBGC's insurance program for single-employer pension plans posted a deficit of $18.1 billion in fiscal 2006, compared with a $22.8 billion shortfall recorded a year ago, the agency said Wednesday.
The $4.7 billion net improvement is mainly due to the airline relief provisions in the Pension Protection Act that led to a sharp reduction in the amount of "probable" liabilities reflected on the agency's balance sheet, the PBGC said.
"The PBGC's financial condition appears to have stabilized for the time being," said the PBGC's interim director, Vince Snowbarger. "Our current assets can cover pension payments coming due for a number of years into the future, and our exposure to additional losses has declined."
The PBGC was created by Congress and funded by premiums raised from companies with covered pension plans. It guarantees pension benefits for roughly 40 million workers by taking over pension plans a company can no longer afford to fund.
If the company offers a pension plan, it is part of their overall compensation plan and the money is due to the employee. More companies are being held to paying whether or not they file bankruptcy. As it should be, especially if the plan allowed the employee to contribute to it. To me it's a simple contract issue: You promised me this and you owe it to me.
Should a person rely soley on that for retirement? Probably not wise, as it will not be enough for a decent quality of life. As wise one, TS said, saving, investing on your own is a must.
So I'd take their money now, as it seems a signal to me and re-invest myself. Of course the unions don't like it....many are still of the mindset (thinking of the major industry here in my area) that the company owes them a lifetime of payment long after their work is done. Again though, seems like a contract issue and what the company will likely do is slowly move toward the employee investment scenario by weeding out those who are not supportive of the new direction.