On Mon, 08 Dec 2008 15:57:21 -0800, Video61 wrote:

>> http://www.bloomberg.com/apps/news?

pid=20601109&sid=aBAw1CQXcZMg&refer=exclusive
>> 
>> Pension Funds Beg Congress to Suspend Billions in Contributions
>> 
>> By Brian Faler
>> Dec. 8 (Bloomberg) -- Pension funds at Pfizer Inc., International
>> Business Machines Corp., United Parcel Service Inc. and dozens of other
>> companies have joined the parade of businesses seeking relief from
>> Congress amid this year伍西s economic meltdown. Instead of money, they want
>> legislation to suspend a federal law that would make them pump billions
>> of dollars into retirement plans to offset stock-market losses as many
>> struggle to find enough cash just to stay in business. They伍西re pressing
>> Congress to consider the issue this week before this year伍西s session
>> adjourns. 伍雾The companies are not out there with their hand out for a
>> bailout,伍雾 says Mark Ugoretz, head of the ERISA Industry Committee, a
>> Washington advocacy group representing big businesses on benefit issues
>> under the Employee Retirement Income Security Act. 伍雾This is not about
>> money; this is about time.伍雾
>> About 800 companies in the Standard & Poor伍西s 1500 Index have pension
>> funds, and they were collectively $280 billion short of the sums needed
>> to pay projected benefits as of Nov. 30, according to a study by New
>> York-based benefits consulting firm Mercer LLC. Those 800 funds started
>> the year with a $60 billion surplus, Mercer estimated. To gain help from
>> Congress, the companies will have to overcome skeptics who say they are
>> using the market plunge to undermine retirement-funding provisions in a
>> 2006 law they didn伍西t like in the first place.
>> 伍雾They伍西re trying to stampede Congress,伍雾 says Jeremy Gold, founder of
>> Jeremy Gold Pensions, a New York-based actuarial consulting firm. Funds
>> with prudent investment strategies were able to moderate market losses,
>> he says.
>> 西熙Losers伍西 Cry 西熙Help!伍西
>> 伍雾This is a failure of risk management by America伍西s pension plans,伍雾 Gold
>> says. 伍雾They failed to reduce their exposure to the equities markets,
>> they continued to gamble, and they lost the gamble. So like all the
>> other losers, they伍西re standing on the Capitol Hill steps, saying
>> 西熙Help!伍西伍雾
>> While employers increasingly offer 401(k) and similar retirement-
>> savings plans, about 44 million private-sector U.S. workers, retirees
>> and spouses still are covered by traditional defined-benefit pensions.
>> Starting this year, the Pension Protection Act of 2006 requires
>> companies to increase pension-fund assets gradually to put them on
>> firmer financial footing, reducing the chances the government will have
>> to take them over for failing.
>> Full Funding
>> Previously, plans generally had to have about 90 percent of what they
>> needed to meet future obligations. At the end of this year, the new
>> threshold will be 92 percent. By the end of 2011, the law requires 100
>> percent funding. Companies that don伍西t reach a given year伍西s threshold can
>> be required to immediately jump to full funding. Plans falling below 80
>> percent funding may face added limits on actions that would further
>> drain assets, such as some lump-sum payments. About half of the 800
>> companies in Mercer伍西s study are in danger of missing this year伍西s target,
>> Mercer analyst Adrian Hartshorn says. World markets have been so
>> volatile, though, that the outlook may change significantly -- for
>> better or worse -- before year伍西s end, Hartshorn says.
>> The 800 companies伍西 pension plans, as of Nov. 30, had aggregate assets
>> covering about 80 percent of projected liabilities, down from 97 percent
>> in September, Mercer reported. Those estimates, based on financial
>> statements prepared under U.S. accounting rules, give a rough idea of
>> where companies stand in relation to this year伍西s target. The federal
>> law, however, has its own standards for measuring pension funding.
>> Desperate for Cash
>> Pfizer, IBM and UPS and almost 300 companies, trade groups and unions
>> petitioned Congress last month to suspend the funding mandate. The law
>> requires 伍雾huge, countercyclical contributions伍雾 at a time 伍雾when companies
>> desperately need cash to keep their businesses afloat,伍雾 the group says
>> in a letter to lawmakers.
>> Spending to pump up pensions may cost jobs by diverting scarce capital
>> from business operations, Ugoretz says. 伍雾If a company has to dump $150
>> million into their pension fund, they伍西ve got to make it up some place,伍雾
>> he says.
>> Atlanta-based UPS, the world伍西s largest package-delivery company,
>> supports pension-law changes because 伍雾given where we are economically
>> today as a country, we think that some reform that allowed those funds
>> to be used in other ways would be beneficial to the economy,伍雾 spokesman
>> Malcolm Berkley says. Calls seeking comment from Pfizer and IBM weren伍西t
>> returned.
>> Investment losses by pension funds have hit companies in a range of
>> industries as the S&P 500 plunged more than 40 percent so far in 2008.
>> Houston-based Lyondell Chemical Co.伍西s pension fund lost $154 million in
>> the first nine months of the year, a 17 percent drop, according to a
>> Securities and Exchange Commission filing. Record Losses
>> Assets fell a combined $130 billion during November in the S&P 1500伍西s
>> 800 or so pension plans, Mercer estimated. That topped total losses in
>> the first nine months of 2008, and broke October伍西s record $110 billion
>> decline.
>> 伍雾Without relief, plan sponsors must shoulder the immediate burden of
>> sudden, unexpected, large increases in plan contributions at a time when
>> cash may be difficult to generate internally or to obtain in the credit
>> markets,伍雾 Mercer伍西s Hartshorn says. Plans with more conservative
>> investment strategies have at least softened the blow. General Motors
>> Corp., the biggest corporate pension sponsor with $84 billion in
>> projected benefit obligations at the end of 2007, is among companies
>> that shifted assets from stocks before the worst of the market rout. The
>> biggest U.S. automaker decided in 2006 to cut its target allocation for
>> equities to 29 percent, from 49 percent.
>> GM made a 伍雾determination that, for the best interests of maintaining the
>> funded status as well as we could, we needed to make that shift into the
>> fixed-income market,伍雾 says Nancy Everett, chief executive officer of GM
>> Asset Management Corp.
>> Notably Absent
>> GM was notably absent from the five-page list of companies and
>> organizations asking Congress for relief from the asset thresholds. GM
>> said its pension plans had a $1.8 billion deficit as of Oct. 31, down
>> from a $20 billion surplus 10 months earlier. At that level, GM伍西s plans
>> would top the pension law伍西s 2008 asset threshold. David Zion, head of
>> accounting research for Credit Suisse Securities USA, says investment
>> managers should have been able to control volatility.
>> 伍雾I just find it interesting: You take some risk in the plan; if it works
>> in your favor, then great,伍雾 Zion says. 伍雾If it works against you, then go
>> ask Congress for help.伍雾
>> On average, the 800 pension plans in the S&P 1500 had 61 percent of
>> their assets in stocks at the end of 2007, Mercer伍西s Hartshorn says.
>> Bigger Stock Bets
>> Some made much bigger bets on stocks. Investment strategies at more than
>> 20 S&P 500 pension funds allocated at least 75 percent of their assets
>> to equities at the end of 2007, according to an October report by
>> Goldman Sachs Group Inc.伍西s Global Markets Institute. Fannie Mae, the
>> mortgage-finance company taken over by the U.S. government, ranked
>> fourth with 84 percent of pension assets in stocks. Because of the
>> market plunge, Fannie Mae made an unplanned $80 million payment to its
>> pension fund last month 伍雾to offset some of the recent investment
>> losses,伍雾 according to an SEC filing. Bradley Belt, former executive
>> director of the federal Pension Benefit Guaranty Corp., says lawmakers
>> should endorse a case-by-case approach that lets the government pension
>> agency negotiate funding requirements with individual companies and
>> reserve assistance for those in danger of bankruptcy.
>> Compromise Measure
>> The top Democrats and Republicans on both the Senate Finance and the
>> Health, Education, Labor and Pensions committees -- Democrats Max Baucus
>> of Montana and Ted Kennedy of Massachusetts, and Republicans Charles
>> Grassley of Iowa and Mike Enzi of Wyoming -- are backing a compromise.
>> It would maintain the funding targets but ease the consequences of
>> missing them, scrapping the threat of an immediate 100 percent-funding
>> requirement.
>> That proposal was stymied last month when supporters couldn伍西t get
>> unanimous consent in the Senate to consider it. The bill 伍雾strikes an
>> appropriate balance between helping plan sponsors cope with the recent
>> economic downturn while also protecting the worker safeguards
>> established two years ago,伍雾 Grassley says. The ERISA Industry
>> Committee伍西s Ugoretz says the proposal doesn伍西t go far enough.
>> 伍雾We伍西re going to have to go back to them to explain again what needs to
>> be done,伍雾 he says. 伍雾We伍西re not blowing smoke here.伍雾 To contact the
>> reporter on this story: Brian Faler in Washington at
>> bfaler@bloomberg.net.
>> Last Updated: December 7, 2008 20:03 EST

Yet another fine example of why private industry cannot provide for 
pensions.  The payments that are received by pensioners will always be 
paid by the people who are currently productive.  When you complicate 
this with "interest" and "dividends" then you are just making the system 
more inefficient and more complicated.  All of the money needed to 
provide the "interest" and "Dividends" comes from the production of goods 
and services delivered by the productive people.  And those goods and 
services cost more because of these payouts.  It is much, much simpler to 
collect a tax and redistribute that money leaving all the "interest" and 
"dividend" accounting out of it.   Individuals can save and invest in 
order to improve their retirements and they will do so.  There is no 
reason to involve fund managers and the like.  The productive sector 
should simply be taxed directly to provide the pensions. Cut out the 
middle man.  Much less overhead.

Michael Coburn