Here Are America’s Most Underfunded Corporate Pensions

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Top Tier Gear USA

trust no one money

We spend a lot of time talking about the public pension crisis because, well, it’s a massive $5 – $8 trillion dollar overhang on the economy and one which will undoubtedly result in some heartache for investors at some point in the future. Unfortunately, there are some problems that are too large for even U.S. taxpayers to fix and, with an underfunding of $52,000 (mid-point) per household, somehow we suspect this is one of them.

Of course, our nation’s various governmental institutions aren’t the only ones to have unwittingly created massive ponzi schemes from which there is no escape. In fact, as Bloomberg points out today, as of the end of 2016 over 90% of the top 200 corporate pensions in the S&P were unfunded to the tune of $382 billion.

Here’s a look at the funded status of the top 20:

Meanwhile, just the top 20 corporate pension funds are underfunded by over $100 billion.

So what happens when these massive corporate obligations become so underfunded that they can’t possibly ever be fixed? As the 400,000 pensioners in the Central States Pension Plans are all too familiar, the obligations get handed over the Pension Benefit Guaranty Corporation (PBGC), an entity which is nearly bankrupt itself, at which point payouts are slashed leaving retirees with about half of the monthly income they expected in retirement. Per CBS:

February was a bad month for Larry Burruel and thousands of other retired Ohio iron workers. His monthly take-home pension was cut by more than half from $3,700 to $1,600.

Things have been rough in the Rust Belt, but this was a particularly powerful punch in the pocketbook for Burruel, who started in the trade at 19 and worked 36 years before opting for early retirement to make way for younger workers. Unfortunately, this sagging industry doesn’t have enough younger workers to pay for retirees like Burruel, whose pension plan is in what the U.S. Treasury Department calls “critical and declining status.”

Burruel and the 400,000 members of his Central States Pension Fund are the canaries in the coal mine as far as pension cutbacks go. At least 50 Midwestern pension plans — mostly the kind jointly administered by trustees for a labor union and a group of employers — are in this decrepit condition. Several plan sponsors have already applied to the Treasury Department to cut back retirees’ allotments.

This cross-section of America includes more than a million former truck drivers, office and factory employees, bricklayers and construction workers who are threatened with cutbacks that could last the rest of their lives.

Who could have guessed that the efforts of our government and largest corporations to backstop the investing risk of millions of households across the country would end so poorly?

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  • Wolf of Enlightenment

    “Burruel, who started in the trade at 19 and worked 36 years before opting for early retirement to make way for younger workers.”
    He retired at 55. They should have picked a better example to drum up sympathy.
    The pension dilemma is not going to end pretty. Promises will be broken and people will be screwed. It was a “too good to be true” system.
    It is also much like social security and welfare. The cost keep sliding down to the young workers of the nation. That being said, no one wants to take funding from 80 yr old Grandma, but neither do they want to support a perfectly fine 55 yr old man who could take care of himself.

  • stone cruiser

    Sorry, but maybe they should have done something before their union leaders gave millions to democrackers.

    • navre12

      When Republicans begin to give priority to the average worker’s healthcare, livable wage, worker’s safety and a decent retirement plan then unions will fund both parties with parity.

      Until such time,the Koch brothers and friends will give to the Republicans and unions will mostly give to Democrats.

      Sadly, the concern for the average worker should be of concern and priority to both Republicans and Democrats.

  • Deplorable Marine Barry

    Why would anyone think that Private Corporations would be any different from the Social Security mess our government made when they decided to spend money that wasn’t theirs and pay people that never put a dime into it?

  • SP_88

    It’s no different than anything else. When the amount of money being paid out is greater than the amount of money being paid in, eventually you will run out of money. It’s inevitable. Especially when the money sitting in accounts for when these people retire is taken out and spent or gambled away in the stock market in the hopes that they can somehow invest it and get enough of a return to cover their losses.
    That’s what they did to social security. They spent the money, and when it came time to pay benefits to the people who paid into it, the money was just about gone.
    You can never trust other people to manage your money for retirement. They will fuck it up almost every time.

  • phicrappazappa

    CEO’s, Professors, lawyers and Politicians are all”overfunded”, at our expense.

  • Kendoaz

    Intel has over $22 billion in cash reserves, so why don’t they put some of that in the pension cookie jar?