Here Are America's Most Underfunded Corporate Pensions

Tyler Durden's picture

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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Shadow1275's picture

Thanks a lot Socialists

blueyefinity@yahoo.com's picture

Socialists should find some better ways to invest those public pensions.

They could learn from Sweden: paying some clowns.

Sweden Deals with Muslim Integration by Sending in the Clowns

http://dailywesterner.com/news/sweden-deals-with-muslim-integration-by-s...

 

philipat's picture

Why not just force these Corporations to fund the defecits (By reducing dividends and executive bonususes until the arrears has been settled) and honor the commitments it made to employees? Of course, CONgress would never act because their Campaign contributions come from same Corporations. Yet another example of a totally corrupt and broken socio-political system in the US.

Son of Loki's picture

"...at some point in the future...." gubmint employees will have to start living like us in the private sector.

El Oregonian's picture

Gov't promises are as trustworthy and as good as a cheap brand of toilet paper. They are both to be gently used, and expect to be frustrated by both for lack substance frequently tearing apart when actually needed, and you are totally dissatisfied with the end results.

All Risk No Reward's picture

The government and the Mega-Corporatocracy are both ruled over by the same group - the Debt-Money Monopolists.

Note that this underfunding is at the top of the world's largest bubble (by orders of magnitude).

Wait until the debt-money bust hits in full force.

TheObsoleteMan's picture

Like the US Postal Service? Their pension problems are a nightmare {unfunded liabilities}, but pay no mind, Congress will continue to soak the taxpayers for more and more money for these over compensated, monkey see, monkey do type of work assholes. They are some of the most rude people you will ever have to deal with, and why? Because they can't be fired for anything short of murder, thats why. I have also noticed just in the last ten years how all of the white males have disappeared from my local post office. As they have retired, women have been hired exclusively to take their place. Typical government union social agenda in action. Next time your in the post office, notice what stamps they have for sale {they have a display of them all on the counter}. This will tell you allot about who is running the postal service. Again, over the last several years I have noticed that blacks are over represented in their stamp program. They even had a Harvey Milk stamp a short while back {queer mayor of San "Fagsico", who was twice arrested for housing runaway under-age boys}. How disgusting. Starting salary for the most basic full time applicant is $55k annually for monkey see, monkey do type of work that should pay $12 an hour. No higher education or trade skills required {how could they have, after all they are not to many years removed from high school}. If there was ever a workforce that needs a wake-up call to the real world, it's this one.

ColonelCooper's picture

You seem a bit disgruntled. Did the Post Office fire you, or just pass you over for a job?

LyLo's picture

They passed over all of us.  They work on a "point" system, like many fed operations, with points awarded for being female, minority, handicapped, or a veteran.  I've never seen anyone hired to the local post office that ticks less than two of those boxes.  It's to the point where the locals inform you when you apply.

That said, boy they sure don't care on the rural route contracts, which I've done and was never asked about my ethnicity or anything.  Weird...  lol

**edit   In case it wasn't clear (it's early) go fuck yourself.  OF COURSE people are disgruntled with the USPS: they literally do nothing but deliver paper copies of bills we already paid online and junk mail that no one even glances at before tossing, while sucking up tax dollars and bitching that the Republicans fucked up their retirement, then refuse to hire regular Americans due to the color of their skin and gender.  How in the fuck are you okay with that? 

rent slave's picture

You can also be fired for theft and fighting.No one has ever been fired for not working.I've been out of the joint for almost 11 years now.

azusgm's picture

Campaign contributions turn into retirement funds for losing candidates. The way to win is to put boots on the ground, ring doorbells, and get out the vote for your candidate.

The rule is one citizen, one vote.

Plan accordingly.

yogibear's picture

Those who are having the last laugh are the CEOs of these companies after using the funds to buy back shares to enhance their stock options and leave with golden parachutes before the SHTF.

The right thing to do would be for the government to seize the CEOs assets and use them to distribute to the pensioners.

Antifaschistische's picture

much ado about nothing....when the stock market gets to 40,000 and interest rates are -12%, the bond market will also continue to soar, and all the underfunding will disappear.

problem solved.

GUS100CORRINA's picture

Observation: There are two influencing factors at work that have made this situation troubling:

1. ZIRP/NIRP Policies of Central Bankers

2. Company stock Buy Backs that used PENSION FUNDS to prop up stock price and paper over sagging business results.

It is my understanding that General Electric's issue is related to #2.

We are in unchartered waters.

Jimmy Jimmereeno's picture

Uncharted, too; forget about charters.

factorypreset's picture

How is a private company offering its employees a pension as part of their employment benefit, underfunding it, then cutting the pension and/or passing the bill onto the American taxpayers "socialism"???

These companies are (or were) all bastions of capitalism. They were overly optimistic in their projections, mismanaged the pension funds (which likely included over paying their executives) and now they're going to (once again) fuck over the employees that were part of their initial success. 

Please fucking explain how this is socialism?  Sounds like crony capitalism at its worst to me.

Pollygotacracker's picture

I am still trying to figure out how Shadow1275 managed to get so many up-votes with such fuzzy logic.

Memedada's picture

He is on ZH. Use socialism (or communism or leftists) to describe something "bad" and you get upvotes...no matter how obviously untrue (as in this case).

LyLo's picture

Most libertarians and conservatives view crony capitalism and socialism as being so similar they are indistinguishable.  Considering most "socialist" programs in the US are actually government/private partnerships (ie crony capitalism) it's pretty easy to understand where they are coming from, if you think about it.  Solyndra is a great example: the government was basically their only source of funds (socialism) but they were a private company that just happened to give all sorts of money to the Democrats (crony capitalism).  Medicare: the government gives the people money for healthcare (socialism) but actually it goes to private facilities that lobby the government and run by their playbook to get the funds (crony capitalism). The two are actually pretty intertwined in this country. 

(This is a common problem when people try to put the whole world into one big ideological basket with neat and clean definitions: Europe and the US share fewer cultural similarities than many cosmopolitans seem to realize.  Turns out, we found our own way to fuck everything up and didn't need a playbook from the EU.)

Zorba's idea's picture

Not sure you can pin that on anyone other than the F'n FED and it's near zero rate and pillage program. What actuary would dare throw good money after bad rates of return the FED/CB's have used to rape Main Street assets by, and expect a positive outcome. Further compounded by buying legislative favors to MINIMUM FUND the pension plans for decades while deceiving pensioners with unrealistic retirement benefits. Classic pig in a poke corporate fascist fuckery. "Uh, yeah you want us to manage your retirement...Ok, bend over motherfuckers." In the end, the "Supreme Citizens" with CONgress's blessing will wack these pensioners, who devoted their careers to these amoral institutions, by at least 2/3 of their retirement benefits. For icing on the cake, Wall Street will cream its panties for such a favorable EBITDA adjustment. Socialist?!! No moron, Crony fucking Capitalism!

illuminatus's picture

Thanks alot Fed with your NIRP, ZIRP and QE. This has very little to do with socialism, it has everything to do with easy money for corporations and corporate policies.

MrBoompi's picture

Capitalists can't handle people's monry without stealing it.  

LetThemEatRand's picture

At least retired employees in these private corporations can sue their former employers to claw back executive bonuses when the pensions run dry.  Oh, wait. 

07564111's picture

do you want a handful of my popcorn :D

TheRunningMan's picture

And this is factored into valuation how?  Oh nevermind...just keep pumping up the index funds.

SillySalesmanQuestion's picture

How could GE be underfunded, they haven't paid any taxes in 20+ years...

These are the things that our ratfuck "representatives" in CONgress need to be investigating, instead of the Russia Boogeyman, they have created.
Roll the guillotines!

Stan522's picture

Because GE is waiting for "other people's money" to bail them out.....

factorypreset's picture

Aren't you a patriot?  Don't you care about democracy?  How dare you cast aspersions on the necessary investigation into Russian meddling??? 

 

/S

 

You nailed it.

johnjkiii's picture

Diversion, otherwise they are investigating themselves.

yogibear's picture

Jeff Imelt has been buying back stock with the money and enhancing shareholder value sacrificing the pensioners. His own net worth.

It's not about doing what's right anymore. It's about screwing you fellow human.

The only justice would be to start seizing these CEO assets or throw them in jail for fraud.

New_Meat's picture

Silly, that is a silly question:

Tax. Loss. Carry. Forward.

GE has been BK since September '08.

Bigly's picture

No problem.

That is why we are going to have death panels when we go into a single payor clusterfuck.

Easy peasy.

what happened's picture

They already have death panels, the numbers are not showing yet.  Government agencies can dictate to doctors how to handle a patient under suspicion through HIPPA.  It is cute how HIPPA is framed as protection for the patient.

 

LyLo's picture

I've actually heard stories where apparently insurance companies are now asking about euthanasia when called to okay treatment.  (You know, like, "Is it legal there and are you sure they aren't interested?")  I have no idea how accurate these accounts are, but I've now heard quite a few of them and that alone is distressing. 

Donno.  Keep an ear to the ground on that one, everybody.

aardvarkk's picture

I could actually see myself taking that option under the right circumstances.  But I ain't there yet, and anybody who tries to decide for me better make sure I'm in pretty bad shape, or I'll try to take them with me.

purdySun's picture

Also Big Ins, endorsed by Big Gov, has slimy hands controlling joystick of medically allowable services. Algorithums allow for benefit denial so no one is technically to blame for "Calling It". 

directaction's picture

Save like there's no tomorrow.
Never mind. Forget that.
There actually is no tomorrow.

Ink Pusher's picture

* Stack like there's no tomorrow and don't keep your stash anywhere near a fucking bank.

38BWD22's picture

 

 

Stack.  That exactly right.  Stay out of debt too.

Ink Pusher's picture

Veteran stackers will rarely if ever hold and debt unless they are "hedge heavy queens".  

bidaskspread's picture

One strong year of a mysterious influenza strain solves this problem.... just saying.

King Of Mars's picture

I got more bad news for pensioners.  If you waiting for generation Y&Z to go to work, be contributors, and bail you guys out, you got another thing coming.  They are not going to go to work.  They’re going to go to the army.  The free shit army, that is.  I have been watching these kids, for a while now.  I wouldn’t expect much out of them.  I especially wouldn’t bet my retirement on them.  Your better off hanging the liars and thieves of your pension instead.

SubjectivObject's picture

just drag them in the mud, but get all their [family] assets.

krampus.'s picture

Don't worry Yellowstone will blow and nobody will have to worry anymore 

Leveraged Algorithm's picture

Or maybe Hillary will blow....