Pension Pains

We recall that it was just a few years ago that United attempted to merge with America West which had already been in and out of bankrupcy in the middle 1990s. After 9-11 it was perilously close to filing bankrupcy again when it was saved by a $380 million loan from the government. The merger deal did not fly when America West backed away from some difficult conditions set by United. Now it's US Air, also in bankrupcy itself, that is merging with America West. You can bet a lot of mechanics and others will be let go in this deal. Just watch. Many observers state that these two weak companies cannot support themselves now. How can they expect the merged companies to survive as they now stand?

City Woes - Criminal Complaints

Airlines are not the only ones with pension problems. Most major cites in the country also have underfunded retirement programs. You may have read about the huge $1.4 billion deficit in the City of San Diego's pension plan. Remember, they are not covered under ERISA and the PBGC for any defaults. They only have the taxpayers to fall back on. Rest assured, they will survive.

The San Diego newspapers say that the pension board that sets the amounts, raises, and other details of the program have been charged in criminal complaints for raising their own and predecessors' pensions and adding other expensive self-serving perks to the plan. This is a violation of state law against self-dealing and the city attorney has stated that he would not allow pension benefits that were void at their creation, to be paid by the city. The trial of these people, if it occurs, will certainly open up a Pandora's box of problems for a new mayor. The present mayor and city manager have resigned, of course, with their pensions intact.

One can only wonder if criminal complaints might be available to some imaginative prosecutor to help put a stop to the wholesale abandonment and abuse of pension plans in industry?

Please forward any comments to .