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Pension Promise No Guarantee of Security

"I can't remember when the last time I bought beef was, outside a hamburger," he added.

There is something particularly poignant -- and painful -- about a broken pension promise, say those who have lost theirs.

Pilot Steve Derebey, with wife Jeane, was looking forward to his retirement from United Airlines until recent news about his pension. (Wanda J. Benvenutti For The Washington Post)

"It makes me angry that a large company can, through the use of bankruptcy law, void the moral obligations that it previously made, just with a stroke of a pen," Steve Derebey said. "That's wrong. They may be financially bankrupt, but this makes them morally bankrupt as well."

But in the case of pensions, union and company officials agree on the cause of the recent decline, and the cause has been largely out of the companies' hands. The bursting of the stock market bubble sent the value of pension fund assets crashing, quickly turning overfunded pensions into underfunded pensions.

Government regulations mandate that companies assume a very conservative rate of return on pension fund assets, tied to the 30-year Treasury bond, and base their fund deposits accordingly. But with the stagnant economy has come record low interest rates, which have required ever larger pension fund deposits just when companies could least afford them. General Motors Corp. and Ford Motor Co. have had to borrow billions of dollars to keep their pension plans afloat.

When United filed its planned pension termination papers, executives told employers, "The Company fully appreciates that the men and women of United Airlines have been counting on receiving the pension benefits that they indisputably have earned through years of hard work. . . . But United's world has changed."

Meanwhile, in a global marketplace, U.S. companies are forced to compete against European companies, whose governments assume the burden of generous pension plans, and developing countries with no pensions.

"You've got U.S. employers trying to compete on cost and quality, and they find they simply cannot afford to provide the type of retirement benefit they would like to have and still pay the wages the worker demands," said Martha Priddy Patterson, a director of employee benefits policy at Deloitte Consulting LLP. "It all boils down to money."

The shakeout, she said, has been "very, very painful."

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