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Bush Saves Economy with Pension Reform

September 24th, 2006 at 07:42 pm

Pension Plans are finally getting reformed, which is a wonderful thing to the American economy. Pension plans were a huge drain on many big businesses in America forcing companies to declare bankruptcy. Ford Motor Company, Delta, and GM are having huge problems making a profit when they have to give away almost a billion dollars a year to pension retirees. The old pension system would force companies to increase their revenues so they would be able to pay pension benefits. This would force businesses to re-evaluate their businesses plans and try to cut costs just to try to break even. What did businesses do to cut costs? Terminate thousands of good employees, purchase lower cost goods making their products have inferior quality, and a whole lot of out sourcing. Realistically, before the year even starts a lot of big businesses were one billion dollars in the hole. Big American businesses were almost doomed right from the start.

Example: Why is AirTran much more profitable then Delta? Before cutting cost Delta was a wonderful company. They were always ranked highest in customer satisfaction, and had a loyal customer base. Did poor management really destroy the company? I doubt it. After September 11th, their sales decreased, and their pension plan inflated because there were more people about to retire.

America was in a catch 22 system before the pension plan reform. American companies have to cut cost, and reduce prices just to compete with foreign companies (that still might be producing a better product). Foreign companies can increase spending in advertising, quality management, and research and development to improve their product and sales, while American companies have to cut that out of their budget to fund pension plans of present and future retirees.

A lot of Americans rely on big businesses for jobs, community development, and competitive prices. I am not saying that pension plans should be cut for present retirees, or people currently contributing, but the pension reform plan will enable big American businesses to be competitive again.

*Next post will be about the financial side of the pension reform. Read this article to see what will be talked about next week*

9 Responses to “ Bush Saves Economy with Pension Reform”

  1. yummy64 Says:

    I'm an employee in a defined benefit pension plan who is relying on that money for retirement because it is part of my employment contract. I pay towards mine and my employer does to. I've been told I'll be getting a benefit at retirement.

    What do you give people in their 40's and 50's who have this as part of their compensation? Tough luck? Too bad so sad? What about their rights? You talk about it like its nothing. That is probably because of your age, and probably becauae you aren't in one and because you aren't relying on it for your future.

  2. yummy64 Says:

    Well that's not what you say in your article. You say it shouldn't be cut for current retirees. Which implied to me it should be cut for current employees.

    What you don't address is the irresponsibility of the companies in not funding the plans. They knew their liability all along. Hell they pay millions of dollars a year to know their liability. They played games and now they are paying for it.

    Defined benefit pension plans aren't bad. If properly handled they work. And frankly for an individual they provide a wonderful benefit.

  3. yummy64 Says:

    I did read that paragraph. In this paragraph you say "present retirees" you don't say "members of the plan". Very different.

  4. LuxLiving Says:

    Yes, JRBeaudry - try waking up one day to find out that 'So Sorry, the 80% of present income you were promised at retirement FOR YEARS isn't coming.'

    No Fun for a 59 year old to hear.

  5. Broken Arrow Says:

    Well... I can understand the dilemma. The hot trend right now is obviously "buyouts". At least this gives employees a chance to decide for themselves which way they would rather go. That also gives companies a chance to recover financially.

    And after that? Good pension plans will probably be harder and harder to come by for those who are currenlty being hired. 401k type plan appears to be the new benefit trend. Perhaps not as good as the traditional pensions, but it helps relieve financial burdens for the companies in that it offers tax breaks and a large percentage of the contributions is from the employees themselves....

  6. JRBeaudry Says:

    I changed the post to the original article"I am not saying that pension plans should be cut for present retirees, or people currently contributing, but the pension reform plan will enable big American businesses to be competitive again." This brought a lot more comments and debate vs my website. So sometimes taking out a few words can make a huge difference.

  7. sammy Says:

    Totally agree broken arrow. I donít get one thing. "A lot of Americans rely on big businesses for jobs, community development, and competitive prices. I am not saying that pension plans *should be cut for present retirees, or people currently contributing*, but the pension reform plan will enable big American businesses to be competitive again." I think he is trying to say not to change it for current pension plan donors, and receivers. Just wont be offered to new employees. Personally, I think there should be an age cap on it. Like people under 40 should only be allowed to put in so much like a catch up plan with 401(k)'s, and IRA's. I think pension plans are too much of a burden. 401(k) plans get a lot more growth potential vs pension plans too.

  8. LuckyRobin Says:

    Delta used to be a good company? When? My whole life I've heard that Delta stands for doesn't ever leave the airport. Or were they just a good employer with bad service?

  9. JRBeaudry Says:

    I donít know... Delta before 2000 they were always regarded as one of the top in the industry. Their stock was on top and they were doing very well. After Sep 11 you could see the stock tank.

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