Comments on: Should The Government Bail Out Pension Plans?

By: tucson cpa

tucson cpa — Wed, 13 Jan 2010 23:23:11 +0000

If this ‘corporation’ – that D.C. was meant to be – doesn’t start running itself on the simple, fundamental principles common even in household accounting – we’re all in trouble!

By: GeoffOT

GeoffOT — Sun, 29 Nov 2009 17:56:30 +0000

Companies should not be allowed to be in the “insurance business” (even if only to their own employees) unless they subject themselves to the same regulations that govern/restrict/protect insurance companies.

By: Terry Johnston

Terry Johnston — Sun, 22 Nov 2009 12:31:52 +0000

I too have mixed emotions about bailing out private deals — but if the government failed (as the most often do in these cases) to ensure rules – guidelines were being followed. It’s sad to leave some poor pensioner in the lurch.

Why can’t the government mandate that pension money would be ‘first creditor’ above all others — taxes, bond debt, share holders, bank loans, etc. if an insolvency occurs.

No company could get a dime of financing unless they could prove the pension funding was up to snuff either from the Banks or the markets and once passed the government is no longer involved.

By: Intelligent Speculator | Financial Ramblings

Intelligent Speculator | Financial Ramblings — Sun, 15 Nov 2009 16:38:43 +0000

[...] -Wealth and happiness @ RedeemingRiches -Find some H1N1 flu stocks @ BuyMyStockPicks -Should the government bail out pension plans? @ FourPillars -How Oil speculation affects oil prices @ ZeroHedge More on this topic [...]

By: The Financial Blogger » Blog Archive » Finanical Ramblings

The Financial Blogger » Blog Archive » Finanical Ramblings — Sat, 14 Nov 2009 19:14:52 +0000

[...] Should The Government Bail out our Pension Plan? by Four Pillars [...]

By: Canadian Personal Finance Blog » Blog Archive » Random Thoughts: Remembering Is Important

Fri, 13 Nov 2009 06:51:27 +0000

[...] Four Pillars asked Should the Government Bail Out Pension Plans? I think my answer is maybe, but they should definitely REGULATE them much more closely! What has [...]

By: GeoffOT

GeoffOT — Wed, 11 Nov 2009 22:10:56 +0000

Mike left out what I consider to be the most obvious of solutions to this particular problem. That would be to still allow companies to self-insure BUT to simply require that any such operation be required to meet with the financial requirements and comply with all of the regulations that are imposed on the insurance industry that sells products to the public. If that were the case, then there would be the same safeguards and reserve requirements that a “real” insurance company has and it would put the burden of figuring how to continue the policies into regulatory hands.

By: Four Pillars

Four Pillars — Wed, 11 Nov 2009 20:21:00 +0000

TMW – good point about the government relaxing the laws.

Part of the problem seems to be that sometime employees (particularly in unions) get pensions that are just “too good”. Companies shouldn’t give them but sometimes they do when times are good.

By: Thicken My Wallet

Thicken My Wallet — Wed, 11 Nov 2009 17:06:03 +0000

How about actually enforcing the law? Federally regulated pension plans fall under the Pension Benefits Standards Act 1985 which is regulated by the Office of the Superintendent of Financial Institutions (OSFI)(there is similar legislation and regulators in each province). The acts clearly set out time lines to make up pension shortfalls (I believe it is10 years for federally regulated industries with defined pension plans) and OSFI can provide temporary relief from the requirements (for example, it gave Air Canada more time to make up its funding shortfall the last time it restructured).

There has been a large corporate lobby to extend relief from the solvency requirements under the reason that a company would destroy shareholder value by fully funding DB pension obligations.

If you enforce strictly, the employees gain at the expense of increasing shareholder value (so the theory goes). If you don’t enforce properly, the shareholder is benefitting at the expense of the current and future employees. If you make both employee and shareholder win by a government bail-out, the taxpayer loses.

So, what poison do you pick (and, more importantly, how the heck did we get to this and what can we learn?)?

By: Financial Samurai

Financial Samurai — Wed, 11 Nov 2009 16:41:33 +0000

We are on the bailout path, so yes, the gov’t should bail out pensions!

On a seperate note, I think it’s important to celebrate and appreciate, but also recognize there are 131,000 HOMELESS VETERANS IN AMERICA given today is Veterans Day.

I wrote about this topic today, and the government should “bail out” the very people who served their country the most!