Well, that might mean a sizable disappointment for some D3 retirees, but the vast majority of Americans in that age bracket would be jubilant to get that much.

One thing to reflect upon: this is the first time in human history that people have come to expect to quit working while still healthy and able, and enjoy a comfortable income (for many years!) to boot.

GM’s pension has been admittedly underfunded by 20B+ several times in the last 5 years.

To address the theory that “it’s just the market”, according to GM’s filings and statements, most of that money isn’t in the stock market. It’s in bonds.

PBGC has tried over the last several years to rewrite some of the rules, but has been met with heavy counter pressure from, you guessed it, big business. PBGC is also admittedly underfunded.

FWIW, according to the people who’d like to rewrite the accounting rules, the D3 pensions are all grossly underfunded. Have been for more than 5 years.

All firm’s pension plans pay a premium to to PBGC in case a firm tanks. A firms premiums, combined with the value of what’s left in the fund after a firm’s death, are what the fund pays out. And a pension has huge legal and regulatory costs that 401K’s don’t.

Of course, the PBGC pays far less than what many firms promised – especially degenerate unionized firms (like airlines, the steel industry). Management promised ginormous benefits for retirees in their 50’s in exchange for labor peace. After bankruptcy, young retirees taking a 50 percent haircut was common.

Make no mistake: this is a very serious situation. However, that’s no excuse for descending into hyperbole. I apologize for same.

You pay each one $30,000 per year which is a total of $30 billion per year. Just how long will 130 billion last?

And that doesn’t even take into account the huge cost of health care and all the dependants which need to be covered.

Let’s be fair here. GM didn’t “raid” its pension fund. I know you really hate GM, but I’m willing to bet that your investment portfolio is down by similar levels. They did take out some money for the separations, but that’s totally acceptable because those people no longer qualify for an annuity.

Imagine the pension fund at, say, GM as a collection of maybe 500,000 annuities at NPV. Some are still being built (for current workers) and some are being paid out (retired workers), but we can assign NPVs to all of them. GM’s role is to try and keep each of those funds at an NPV that is considered “funded.” If someone is separated from GM, the annuity they have built up so far (could be around to $700-800k at NPV) is no longer needed. GM doesn’t have the liability unless they’re paying a reduced amount after separation. So, they use that cash to pay the separation. Any deficit comes from corporate cash. Any surplus funds the pension.

To say that GM robbed the pension to fund for restructuring is disingenuous. Likely all of the decline in % liabilities funded is due to the decline in the overall markets. What this article doesn’t point out is that their combined liabilities should have shrunk over the last two years, which is another reason why the fund would be smaller YOY.

If the underlying investment of a funded pension dropped to 70% of its previous year’s value, then it would certainly make it appear that it is now 30% more underfunded. I know my 401k balance is a LOT lower today than it was 12 months ago, 30% or perhaps greater.

My point is, that I suspect that this new increase in the pension gap is a result of investment losses, not the siphoning of money out of the fund.

In addition, I don’t think that any of the 3 companies could actually withdrawal money out even if they wanted to.

“For plans with a 2009 termination date, the maximum guarantee is $54,000.00 yearly ($4,500.00 monthly) for a single life annuity beginning at age 65. The maximum is adjusted downward for retirees younger than age 65. For example, the maximum guarantee for a participant who retires at age 62 is $42,660.00 yearly ($3,555.00 monthly) for a single-life annuity. At age 55, the maximum guarantee is $24,300.00 yearly ($2,025.00 monthly).” http://www.pbgc.gov/media/key-resources-for-the-press/content/page13542.html