Pension losses due to economy > Golden years not so golden

June 2, 2009
Pension losses due to economy > Golden years not so golden
Economic News and Information for Consumers 

There’s lots to worry about with GM’s not-so-sudden bankruptcy filed yesterday.  We have the closing of numerous plants, brands that are being sold to foreign countries and scared suppliers of all kinds.  But those most concerned with GM’s filing are the 650,000+ retirees who depend on their pension to pay basic expenses.

If you’re under the age of 45, you probably don’t even know what a pension is because they basically don’t exist anymore but back in the day, companies provided a pension for their employees who provided many years of dedicated service.

This option was for the biggest of companies and helped them to land the best employees.  It created a very competitive hiring marketplace.  The idea is that after an employee would retire, they would continue to receive health and retirement benefits for them and their families.

But when GM started to struggle, the first thing to go was the benefits.  This left many baby boomer retirees without health insurance at a time when it is highly unlikely another company will pick them up, the risk would just be too high.

After health benefits comes pensions, this is the next worry for retirees.  GM’s position on this has been a bit vague.  They have basically said that the pension fund is safe and funded at 90% but this fund is now basically under control of the government, ergo the term Government Motors.

We don’t believe that the government would stick it to hard working retirees but the money has to come from somewhere.  If push comes to shove it could happen.

We expect more details of GM’s bankruptcy to emerge in the coming weeks so check back for updates.