Surrending CS Pension?

[wkmac]

Saw this morning where GM announced major cutbacks in production and workforce. The obvious is they are not moving product but along with that are retirement and healthcare costs which are huge. One figure I saw several months ago that there was more healthcare cost built into a single car than the total cost of the steel to make it and there's about $1700 of steel in the average car last figure I saw. Analyst also speculated as they idle workforce and production plants that major whitecollar cuts are also coming soon. Does make sense that all the whitecollar staffing from closed plants can't be grafted back in somewhere else. Also plant closures could effect UPS in those areas as this will have economic impacts that will trickle down into other segments.

As a national employer, GM is a huge lynchpin in the national economy so I would think this could have a cascade effect in many areas. We would do wise to watch this closely as GM was reported several years ago to back some type of nationalized healthcare plan in order to save it's bottomline and avoid the very scenario we're seeing now or worse. One report I saw used GM as an example of what would happen to the bottomline if the federal gov't took over healthcare and the profits increase was in the billions. This same report however didn't mention any taxes paid out to fund such a plan so who know's how that would washout but the point was for the corporation, federal control of healthcare would in one sense be a dream come true for a major corp. like GM.

As for some type of nationalized plan I'm not convinced the current administration is beyond taking something like the Clinton idea for healthcare, making it their own and pushing it forward. I believe even Newt Gringrich over the last year was hanging with Sen. Clinton and even expressed some glowing comments about her earlier ideas with healthcare. I'd not be surprised to see it come to the surface again but as a GOP idea instead of someone else. One could argue the GOP co-oped the democrats with the prescription drug benefit as I myself believe that to be the case.

Some may think GM and UPS are apples and oranges and in one sense that's true but there is more in common than we realize too. As for the UAW, reports are that they were in the boat all along and will offer no resistance. That I don't know but we would do well keeping our ears to the ground going into 08'. The nationalizing of healthcare may be a "just of matter of time" as I believe that's the case no matter who controls Washington. GM's situation is just another brick in that wall but as UPSers and with our own situation it does bare watching not only from the standpoint of healthcare but also pension. Who knows, someone may just suggest nationalizing all pension systems too. Besides, if it's good enough for healthcare why not? Great way to save Social Security too.

Hey wait a minute! You know the more I think about that maybe that is what they/we should do, take our healthcare and CS plans and fold them into a federal system. Neither the company nor the union would have any say which answers many concerns from both sides here. We get the backing of the American taxpayer so no matter what happens to UPS or the Teamsters we're protected. You know the more I think about this I'm starting to like it because we could get the Congress to set loopholes in place allowing us to retire early, work where we want or for that matter I'm sure there's room for graft and corruption where we can abuse the system and make out like bandits. You know, now I'm starting to understand some of you better and I gotta admit you may be right and onto something afterall! You are smarter than the average bear!


Cool! OK what's the plan?

 

[Unregistered]

It is a fact that the contribution levels are insufficient.

"if the teamsters know it is underfunded, then why do they raise the benefit without covering the costs"

I already addressed that raising the benefit level prior to reading your post, I believe it was politically motivated.

Now that you have admitted the union raised the benefit without covering the cost the argument that the company underfunded is lost and mute.

 

[my2cents]

Below are a few snippets from a House press release regarding the "Pension Protection Act of 2005" and from the President of the Standard Forwarding Company, who testified in the Senate on the need for multi-employer pension plan reform. As it stands now, with the current demographics and the withdrawal liability issue of many of these plans, they are increasingly becoming a bad deal for both workers and employers.

Multiemployer pension plans were designed for a 1940s workforce that assumed the multiemployer labor base would continue to grow, said Kline. In recent years it has become glaringly apparent that this outdated system creates obstacles for employers, thus threatening the retirement security of American workers and putting American taxpayers at risk of being forced to fund a multi-billion dollar bail out.

Unless significant reform is enacted multiemployer plans will ultimately lose the fight. Rather than creating an environment that encourages employers to grow their businesses and participate in these plans, the law has created a death spiral with traps and penalties that will forever drive current and prospective employers away. In fact, in a March 5, 1982 Wall Street Journal article, George Lehr, the Executive Director of the Central States pension plan said in a reference to withdrawal liability: In theory, its a wonderful law; in practice, it doesnt work. In the long run, employer liability is the single most damaging thing pension funds will be facing.

The financial impact of withdrawal liability is now overwhelming. The amounts of liability, which are calculated on a pro-rata share of underfunding, now far exceed the ability of most companies to pay; it exceeds their entire net worth. The withdrawal liability of Standard Forwarding for 2004 is $20 million which is well beyond our means. Bankruptcy would be our only recourse.

Nothing could be more unfair or more anti-business than a law that provides that even though you have made all of the pension payments agreed to with your union, you still can lose all of your companys assets if a plan becomes underfunded resulting from the actions of others outside your control. Essentially, the changes made to the federal multiemployer pension laws in 1980, made all contributing employers bear the burden for the pensions of workers who never performed any jobs for their company and for the pension obligations of their competitors who have gone out of business. That violates the most basic American principle, that a person and business should be allowed to prosper from the fruits of their labor.

Just as the Federal Government has found it intolerable that 90 percent of these costs in single employer plans are passed on to the PBGC, the employers in multiemployer plans find it intolerable that they are made to bear this huge expense. In fact, they can no longer shoulder this cost. No company should have all it assets on the line for an obligation it never made to workers who were never employed by them. The 30 percent net worth standard needs to be restored by Congress.

A hypothetical question. If a majority of bargaining unit employees wanted out of these plans, would the IBT go along with that request or would they keep it off the table?

 

[ok2bclever]

Frankly, a full active membership could get the union to do absolutely anything the membership wanted as far as negotiating priorities and absolutes.

The union isn't worried about that ever happening and I don't see it either.

The average worker is excrutiatingly lazy on this type of issue.

They will work ten, eleven hours a day busting their behind, but they won't put in an hour at a rally or ten minutes writing a letter.

So the International gets to make the decisions and priority list with just a touch of lip service to the membership.

wkmac, as a Michigan native, home of GM I am well aware of their problems and there is a world of difference between GM and UPS.

More like apples and worms than apples and oranges.

As far as the pension issue, it's the same.

Underfunding in respect to benefits promised.

As mentioned it isn't the only problem or related issue as none of this is that simple, but it is one of the root problems.

And look, they are a single employer fund, not a multi-employer fund with lots of other out of business companies to blame it on.

Of course I have been stating that it is a national problem, not a Teamster or multi-employer problem for quite some time and that single employer funds have actually have a far worse record of failing and abuse than multi-employer funds, but what do I know.

Just the facts.

Not always enough unfortunately.

 

[tieguy]

Multiemployer pension plans were designed for a 1940s workforce that assumed the multiemployer labor base would continue to grow, said Kline. In recent years it has become glaringly apparent that this outdated system creates obstacles for employers, thus threatening the retirement security of American workers and putting American taxpayers at risk of being forced to fund a multi-billion dollar bail out.

Interesting point and one not really touched upon before . Growing the base would have to be a key to the health of the multi employer concept.

Once the base shrinks the options to maintain viability are not very appealing as this real life scenario shows. Partitioning of the fund would force the plan administrators into a direction they have so far been reluctant to pursue.

 

[wkmac]

OK2BC,
Disagree my friend on the apples and oranges. Healthcare cost for both are esculating higher and higher would you not agree? How is that different for one from the other and that is my point. Healthcare costs were a driving factor in the CS situation or at least the info and the long process of explaination we saw at the CS meeting at local 728 sure did point out this fact. Healthcare cost for retirees also carried over and impacted the whole situation. GM pointed specifically at Healthcare cost and everyone looks at the CS situation and only sees the retirement changes that happened 2 years ago but also look at the healthcare changes that happened as well. Co-pay went up and to honest should have much sooner but that's another issue, adminstrative changes took place along with a higher monthly healthcare insurance premiums for retirees and in some cases very significate. We now have in our area Blue Cross and Blue Shield as the primary provider of coverage instead of CS alone. GM and UPS are in different type of pension plans but both members go to the same doctors and hospitals for healthcare and both pay the same esculating costs. You could use GM to actually argue for multi employee plans and ask would GM be in the situation if they were in a multi-plan with say Ford and Chyrsler? I don't know the answer but would be a interesting discussion for sure.

You are 100% correct that lack of membership involvement is at the core of the problem but then I would also respond what is a membership suppose to think when the leadership for years barred the general membership from even electing it's own national leadership and there is both pros and cons to this process and then to top it off all contract discussions are held and maintained in total secrecy and when D-Day comes for a strike vote you are told nothing other than to trust your union. Sorry Charlie but I vote No Strike last time and every time in conditions like that. The problem is the chicken or the egg argument. What comes first to make it better, membership active to force the change or leadership leads to get members active that bring about change? I'd tend to side with you on the membership taking the lead but reality sez it won't happen.

Tie
The partition idea seems the most logical at this point because the simple fact is the current plan is not going anywhere. Congress will have to pass the law to make this happen but at this point I don't see that. To partition would likely place some retirees in the current plan straight over to gov't control and their agencies that back pensions are already stressed to the max as it is. I can't see them adding to the problem although they do some stupid things in Washington every day. The partition idea on the surface seems good but there are still some unanswered questions and that is who would provide oversite? If UPS contributions is segregated from the others and used for UPSers only then would you have a trustee from Yellow Freight, who is also a competitor, provide oversite for those UPS funds? Would you form a new trustee board of equal parts union and equal parts company? Hell those clowns can't agree on a good Tee time or bar to hit for 3 pm cocktails during contract talks so you could just imagine the lunacy in investment oversite meetings. I do think the partition idea has merit for consideration but there is also many details to work out too. Keep talking about it because the more it's done the more likely we will find and learn more about it both good and bad.

 

[ok2bclever]

wkmac,

You compared GM and UPS in the apples to oranges sentence, not pensions.

GM produces physical products with a pretty crappy and bloated workforce and loses money at it.

Is downsizing and drastically losing market share.

UPS sells a service with a lean and mean workforce and makes plenty of money at it.

It is still growing and gaining over all market share in the world and it's many diverse faces.

You can't get much different than that.

As far as health care and pensions, those are only two of a myriad of problem facing GM.

Health care is an important issue, but has no direct bearing on the CSPF issue.

Healthcare was a distinctly separate part of the CSPF, including even to the point of contributions.

The CSPF was having financial problems prior to and separately from the healthcard side.

In fact, CSPF opted to scavenge the healthcare contribution section (which was also running in the red) over to help shore up the pension side and have their retirees pay for their own insurance at the fund's cost.

You are correct in that GM is a single employer fund as is Delphi (a spin off a couple of years ago and in even worse shape).

I have three brother in laws at Delphi (a single employer fund) apparently about to lose everything as Delphi is preparing to play the bankruptcy card where they get to stay in business, even keeping their name while dumping their pension liabilities on the government and throwing away as many employees as they want and paying the rest of them whatever they feel like.

 

[wkmac]

Yes in the sense of type of business vastly different. In the sense of facing the same crisis concerning healthcare basically facing the same boat. Besides, my original post I don't think I spoke directly to pension other than one sentence of "The obvious is they are not moving product but along with that are retirement and healthcare costs which are huge." That was meant to mean retirement healthcare and not retirement specially. I guess I thought the rest of my post would convey that. If you got another idea it wasn't meant to be. It was meant to specially concern itself with healthcare cost and nothing else. I would hope now that this would be clear enough to avoid further confussion. Sorry if such was created.

 

[susiedriver]

wkmac,

I think the crisis facing GM as far as health care is vastly different from UPS. For one thing, no GM retiree pays anything for healthcare. GM foots the entire bill. Contrast that to UPS, as you can see, there's no comparison. Under the new contract, retirees would have to pay $370/yr & up to $752 for family coverage. That proposal has to be approved by the courts, which won't happen until next year.

GM pays for 750,000 individuals medical benefits, 110,000 are active hourly employees. Not quite like UPS either.

Why the greatest nation on the planet doesn't provide everyone with affordable healthcare is beyond me, it seems like the civilized thing to do. I would assume, as a Libertatian, you disagree.

 

[moreluck]

This may sound cruel, but I have a hard time feeling for people forced to pay for some small portion of their healthcare when I fork over $3000 quarterly for healthcare. It's dam expensive and it has been growing higher with each quarterly bill I receive.

This includes no eye, no dental. We shopped around and this was the best we could find. Just my view of it. Sorry if I offend anyone.

 

[ok2bclever]

At CSPF new retirees are supposed to foot $1150 a month which will go up to $1250 a month next January I believe.

That payment is to UPS for our healthcare.

That's $3750 quarterly and our monthly pension isn't as high as your husband's.

You cannot sympathize with that?

Perhaps you weren't aware of what the new retirees are faced with?

 

[moreluck]

ok2be....no, I wasn't aware of those figures. Thanks for that info. Bottom line is medical coverage is just plain too high and God help us if we're caught without it.

 

[traveler]

Why the greatest nation on the planet doesn't provide everyone with affordable healthcare is beyond me, it seems like the civilized thing to do...

As a couple with NO HEALTH INSURANCE, you would think that I would be in agreement with your statement but nothing is farther from that fact.

First, let me say that when I was in management with UPS (this was about 25 years ago) I had wonderful coverage (seemingly at no cost to me). That was until a doctor in New Jersey said something that really made sense. When on a regular visit he suggested a certain expensive test I simply said, "go ahead, I am covered for anything you want to do." Well, with that he took a moment to explain that that particular attitude will soon bring down the entire USA medical insurance system. He did give a much more detailed explanation but I will not go into that here for the sake of brevity. Well, needless to say, just a few years later things did change drastically from full coverage policies to HMO's, PPO's and the like.

Right now, having no insurance, my wife and I shop for prices on thing like drugs, blood tests and other services. People that have insurance have no idea how much different prices can be on these items.

Example 1: my wife, being a retired RN shopped the price of various blood tests between what our physician, the local hospitals and other labs charged. She found that the least expensive was the hospital even before her 10% professional discount. We approached the doctor with this when he was ordering some routine tests and after a short discussion on this he offered to match the lowest prices available!

Example 2: We are going on an extensive cruise in 2006 to some very exotic ports. For some places, malaria medication is recommended and there are two types. The one we chose to use we also shopped for price. The differences are dramatic. The highest we found was about $6.21 per pill. Canada offered the same at about $6.05 per pill, much less of a difference than I thought there would be but still less. The least expensive by far was Sam's Club pharmacy at about $4.55 per. When did any of you out there shop for drug prices?

Example 3: Most medical providers offer a discount for payments at the time the work is done. Some as great as 40%. Many providers will negotiate even if they don't have a policy on discounts. Takes some work but certainly worth the effort. Yes, I know there is some negotiations that insurance companies do but not as much as you may think.

Now a question: If there were universal health care in the USA how far would the coverage go? Many times you hear of people with huge expenses (millions of dollars a year) for treatments. Would these persons be covered? Where would the cutoff be dollar wise? Would "orphan drugs that often cost $500,000 to $900,000 per year per person be covered? Why not? Who would administer all this? The federal government? Would it be farmed out to private companies? Fraud possibilities? Fraud is rampant in medicare with the government doing little to halt it. There is no other country in the world where a "universal system" works well if one looks closely. The last an biggest question is WHO PAYS? A special tax to all workers or just an increase in income tax?

By the way, over the last five years my bottom line costs are LESS paying all medical bills than it would have cost for insurance for my wife and I. This includes not only regular medical care but also cancer treatment. Working with doctors, hospitals, etc. directly is not as difficult as one would think.

 

[susiedriver]

Traveler,

With you being a Libertarian, I would expect you to be in total disagreement with the idea of 'universal healthcare'.

 

[ok2bclever]

traveler,
That sounds all fine and dandy, but when you, your kid or your wife is really sick you don't normally have time to "shop around".

In reality you are gambling all you own that you don't get truly seriously ill or hurt.

I managed to time an emergency appendectomy while traveling (you know all about that) in New York City.

I was in NYU for 27 hours and I am not positive what the final bill is going to be to the insurance companies or me, but I know the bills that have found their way from NY to MI so far exceed 18 thousand bucks for those measly 27 hours.

This for a serious, but basically routine illness.

That is just unbelieveable to me, but it is reality.

How many days like that can one without insurance afford.

Realize, I wouldn't have had time to shop around if I hadn't had insurance to find a 12 thousand dollar steal of a deal ambulance, hospital, nurse and physician.

What you are doing has worked for you so far and I hope your good luck continues as well as it's your right to do as you wish, but it's still high stakes gambling any way you look at it and I would not recommend living such a gamble for anyone.

 

[traveler]

ok2,

You make some good points, and yes we do live on the edge a bit. Let me say that I believe fully in personal responsibility. I theoetically put away what insurance would have cost monthly and use that to pay medical expenses. Would I recommend this for others? That would be a resounding NO. I just got a bit ticked when I learned the enourmous cost to insure my wife and I an decided to go it alone since we could stand a pretty big hit and still not materially change our lifestyle.

As to shopping for prices, yes, we do that for things like tests and medications. For emergencies and hospitalization there is much negotiation that can be done after ther fact.

By the way, I never bought life insurance either. Somehow, I always felt that was a bet you could only win if you die. Again, I have put away what I would have spent on this and am now far, far ahead of the game. I don't have to die to collect the money I saved here.

 

[ok2bclever]

Well, good for you if you have amassed enough money to feel you could take a serious illness in financial stride without stumbling.

Life insurance isn't actually for oneself, that would be a stupid bet.

If you have enough to take care of those you love or are responsible for if you were to die today, buying life insurance is a waste.

On the flip side, if you don't have enough to take care of those you love or are responsible for if you were to die today, then not buying it is totally selfish and irresponsible regardless if one is lucky enough to end up living to 100 or more.

I assume you are of the former rather than the latter.

when I was in management with UPS (this was about 25 years ago)

Errr, if you don't mind my asking, have you gone over a hundred yet?

BTW, what do you mean you are far far ahead of the game?

You are living richer than if you died?

 

[traveler]

I started my career in 1965 and left in 1990. The 25 years ago I mentioned was during my career. Yes, I retired (left) early at 46 years of age after 25 years of service. That was all my body and mind could take. It was one of the good decisions in my life.

Not nearly 100, just 62 a few days ago. My first SS check will be deposited in my account December 1st. I decided to start collecting now since I have no faith there will be anything left in a few years.

Ahead of the game = alive, well and retained all the money I might have spent on life insurance.

 

[moreluck]

traveler.....good advice....always take the money as soon as you can. There are never guarantees about even living to 65. This advice has been the same from every financial person we have come in contact with.

Too many instances out there where people retire, leave or whatever and keel over at 61 or 62.

 

[ok2bclever]

moreluck, kind of gauche to happen to pick 61/62 as your keel over age talking to a guy who just said he turned 62.

You got a mean streak lady.

More power to you traveler that you got to retire so early and are taking advantage of it as much as your traveling sounds like you are.