General Motors Pensioners

[fuji]

but we said we'd be the insurer against that possibility.

Do you have a citation for that? I am specifically looking for evidence that we said we would insure it BEYOND the contributions that employers put into the insurance fund that was set up. I don't think we ever made that promise but if we did I'd like to see proof.

I'm 100% with you that we liquidate the assets of employer--inventory, plants, GMAC, real estate, dealer debts--and union--office furniture and a bulding or two, whoopee

There's likely a sizeable strike fund there as well which should be liquidated and paid into the pension pot. In a fair outcome neither GM nor CAW survive this. Both cease to exist.

Wanna bet when we're selling assets and nicle-and-diming retired welders outta their pensions, the execs who ordered those welders to build money-losing cars, lied about profitability, and failed to do contracts the company could actually afford will have already put through their multimillion dollar final cheques and topped up their own pension accounts? Wanna bet they're just a tad more generous than the welders month by month?

If there is evidence that they lied--meaning fraud--then we should be able to go after their personal assets on the grounds that they had a fiduciary duty as directors of the company to make a full and honest disclosure.

As for the workers I do not agree that they are blameless here because they are the ones who elected the union negotiators. They share responsibility and as a result they need to share in the pain for their poor decisions.

The union (and by union I mean the pensioners and workers) had sophisticated negotiators who clearly understood, or should have, the risks they were taking and share responsibility for the outcome.

In my view CAW was mercenary in negotiations, forcing the companies to accept steep wage deals that left them barely solvent. Now that those barely solvent companies have failed they cannot claim to be innocent bystanders. They, meaning the retired workers, voted for this back then, and will have to live with it now.

 

[Malibook]

Several years ago—the last time the carmakers couldn't manage their affairs to keep their promises—we, the people of Ontario, said we'd forgive the required annual payments to the Guarantee Fund. And we, the same people of Ontario, were the ones who made it such a sweet deal for the companies that the fund was inadequate, but we said we'd be the insurer against that possibility.

The government allowed them to hold off on some payments in order to buy them some time for them to get their shit together and become viable.
They failed and all this did was prolong the collapse.

The government is under no legal obligation to back up the pension guarantee fund.
This is not like the depositor's insurance CDIC.

They may feel some political pressures to do something but anyone who thinks they are legally required to make that fund whole is out to lunch.

Actually, I'd say the political pressure is overwhelming on the side of not bailing them out.

 

[oldjones]

…edit…in the 20 years since the rules changed about contributions the union has not seen fit to make the contributions a barganing issue as they could and should have. Now that the pensions are in trouble it is up to SOME ONE ELSE to fix the problem.…edit…

I'd bet you're wrong about the bargaining issue point, but in any case, when the company says we're gonna pay thus and so, and they're lying about having the money, you're saying it's the union's fault?

When the company and the government have a contract that the government will pay what the company cannot, the union's supposed to pay?

Isn't landscaper saying when the company or the government's "…in trouble it is up to SOME ONE ELSE to fix the problem"

The mind boggles.

 

[fuji]

Put this another way: CAW back then demanded that the workers be paid money that, in reality, was NEVER there. It wasn't really there back then. It plainly isn't there now.

The workers should have known better and will have to live with their poor decision.

 

[oldjones]

The government allowed them to hold off on some payments in order to buy them some time for them to get their shit together and become viable.
They failed and all this did was prolong the collapse.

The government is under no legal obligation to back up the pension guarantee fund.
This is not like the depositor's insurance CDIC.

They may feel some political obligations to do something but anyone who thinks they are legally required to make that fund whole is out to lunch.

I believe you're factually wrong about the government having no obligation to back up the Guarantee Fund.
Quoting from the Fund's Financial Statement:
The Act provides that if the assets of the Fund are insufficient to meet payments for
claims, the Lieutenant Governor in Council may authorize the Minister of Finance of
Ontario to make loans on such terms and conditions as the Lieutenant Governor in
Council directs. The total liability of the Fund to guarantee pension benefits is limited to
the assets of the Fund plus any loans received from the Province.
If it was not intended that the Govenment would so insure the fund, such a provision would be silly.

Yyou could certainly argue that's a government choice rather than an obligation. But I doubt that was how it was sold at the time, just as the GM execs probably didn't sell their pension promises by mumbling, "if we can afford them" under their breaths.

 

[Malibook]

I believe you're factually wrong about the government having no obligation to back up the Guarantee Fund.

I am quite sure I am correct and you are wrong.

http://www.thestar.com/News/Ontario/article/615958

But McGuinty said topping up the safety net may not be an option.

"We would never have all the money that would be needed to top it up to meet all the demands for all Ontarians who are experiencing troubles with their pension plans," McGuinty said.

Experts warned in February that the unique safety net was teetering on the edge of being wiped out and could fold if a large corporation were to go under.

McGuinty will be walking a fine line if he's thinking about bailing out the GM or Chrysler pension plans given the shortage of funds in the province's pension guarantee fund, interim Progressive Conservative Leader Bob Runciman said.

That step "would be troublesome to the vast majority of people in this province," Runciman told reporters. "Most Ontarians don't have pension plans."

 

[Malibook]

I believe you're factually wrong about the government having no obligation to back up the Guarantee Fund.
Quoting from the Fund's Financial Statement:
The Act provides that if the assets of the Fund are insufficient to meet payments for
claims, the Lieutenant Governor in Council may authorize the Minister of Finance of
Ontario to make loans on such terms and conditions as the Lieutenant Governor in
Council directs. The total liability of the Fund to guarantee pension benefits is limited to
the assets of the Fund plus any loans received from the Province.
If it was not intended that the Govenment would so insure the fund, such a provision would be silly.

Yyou could certainly argue that's a government choice rather than an obligation. But I doubt that was how it was sold at the time, just as the GM execs probably didn't sell their pension promises by mumbling, "if we can afford them" under their breaths.

Doesn't look like much of a debate to me.
This doesn't look like a CDIC type guarantee to me.
Looks like plain English to me.

 

[james t kirk]

They have... pension plans in a non-union or non-public sector environemnt are almost all defined contribution plans with no obligation from the employer beyond the initial contribution.

That's my point.

I remember reading that even the mighty "teacher's Pension Plan" lost 19 billion dollars last year. Something tells me, that's going to be the next hog at the trough. (And a whiny big fat hog at that.)

Clearly pension plans are nothing but trouble waiting to happen.

 

[fuji]

Doesn't look like much of a debate to me.
This doesn't look like a CDIC type guarantee to me.
Looks like plain English to me.

Yup, that's how I read it too.

The government has the option to make a loan, not an obligation to, and certainly not an obligation to foot the bill--loans are repaid. The government has just said it is not interested in exercising its option and will not be making any loan.

The CAW negotiators, I presume, can read as well as I can.

 

[james t kirk]

That's the current concept, but the GM-style promised payout was long the norm. As long as no one forced companies to prove they could afford their promises, required them to actually have and put aside the money, employers could always sweeten the hard to cost down-the-road pension promise at contract time, instead of giving raises that their secretarys could cost on a napkin over lunch. And the unions took their word.

Instead of properly funding their obligations, they often paid them from their current accounts. Not just carmakers, most employers who'd folowed their lead. It's called a Ponzi scheme; new entrants pay off the old. Works fine as long as you're growing with the economy, and as long as your pensioners die off promptly. Bit if the medical care you also never costed keeps them alive longer …. You gonna hafta sell a lot more cars.

Sadly, instead of policing the scam, successive governments participated. Seemed cheaper and easier to be the insurer of last resort for the fortunate few, and pay out the occasional bankrupt company's obligations than to require properly funded, self-financed pensions for all I guess. And that's why we're now on the hook in Oshawa and Windsor.

The current fad: Defined Contribution (contributions have always been defined, what's changed is: No Promised Payout—just like that RRSP that shrunk over Xmas) at least usually sets up independent fund holders. I can't be the only one who recalls that employers used to 'hold' employees' contributions along with theirs until the temptations to loot became overwhelming. Which they did on a regular basis. Conrad Black and the Dominion Store Fund anyone? When the pot's big, morals shrink.

Face it folks, we the people are always and will always be each others' insurers of last resort. It's high time we demanded our pols stop taking their bum buddies' word for it that, "the monies all there" and actually demanded, "Show me the cash". Or this will just happen again.

And punishing aging windshield installers won't fix anything.

Why should the Gov't be on the hook for anyone's pension plan other than the one they run for their own employees?

Sorry, tough titties would be my answer.

The gov't should not be obligated to back up anyone's pension plan. Sorry, but if you worked for GM and GM goes broke, you figure it out for yourself.

This is why I am all for all employees having a self directed RRSP that part of their salary goes into and it's LOCKED in. They can't touch it till they're 65.

I knew this one chick who was an HR director at some company in Brampton where they had and RRSP plan and most of the loogins who worked in the plant would promptly withdraw any money in their RRSP account as soon as it was there in order to buy beer.

 

[oldjones]

I am quite sure I am correct and you are wrong.

http://www.thestar.com/News/Ontario/article/615958

But McGuinty said topping up the safety net may not be an option.

"We would never have all the money that would be needed to top it up to meet all the demands for all Ontarians who are experiencing troubles with their pension plans," McGuinty said.

Experts warned in February that the unique safety net was teetering on the edge of being wiped out and could fold if a large corporation were to go under.

McGuinty will be walking a fine line if he's thinking about bailing out the GM or Chrysler pension plans given the shortage of funds in the province's pension guarantee fund, interim Progressive Conservative Leader Bob Runciman said.

That step "would be troublesome to the vast majority of people in this province," Runciman told reporters. "Most Ontarians don't have pension plans."

Like Harpo binding his government to fixed elections, or Alberta forbidding itself from running deficits, governments are basically above the law. Reading you article, McGuinty admits the province's obligation (moral for sure, and doesn't deny legal), but focusses on not having the ready cash.

You also mentioned the CDIC as a different kettle of obligatory fish. The CDIC Act actually uses very similar wording to talk of the Government's financial role:
10.1 (1) At the request of the Corporation, the Minister may, out of the Consolidated Revenue Fund, lend money to the Corporation on such terms and conditions as the Minister may establish.
and I'd bet you can't find a more binding provision. Also we should note that the feds, unlike GM's contract negociators, were smart enough not to be open-ended. They limit the size of deposit they insure.

Government, almost by definition, is the insurer of last resort in all sorts of instances, from the Manitoba floodway to picking helicopter victims out of the Atlantic, or reestablishg pulp mills after forest fires. Beyond the top of the news notoriety of this example, it's not really different.

What would be different would be a pol getting out in front, actively policing such cases, and maybe doing the math that GM's bean counters were clearly incapable of back when the deals got signed.

Imagine if the Auditor General had had access to GM's pension records a decade or so ago, when the cracks got to big for the Little Dutch Boy solution?

 

[james t kirk]

Both my parents had pension plans. They both died young.

My mother paid into her teachers plan for probably 40 years. She collected a pension for about 6 years.

She would have been (or we would have been) far far far better off if she just had put that money into an RRSP account. Then it would have been hers.

Same with my dad, though to a lesser extent.

My dad worked in a factory in Hamilton. He worked his ass off in a fucking hostile environment day in and day out. When he started there, the deal was a pension plan and he paid into that over the years. When he retired, he didn't have a dime in RRSPs. All those years working, he just figured that when he retired, he'd have his pension, his CPP and that would carry him through (and it did I suppose.)

Even if I worked in an environment where there was a pension plan (I don't, never have, and I worked for an international corporation of over 42,000 people) I'd want to have my own RRSP. I just wouldn't trust the fuckers to do the right thing.

My dad was just part of that post WW2 generation that figured his pension was as safe as houses.

 

[fuji]

What would be different would be a pol getting out in front, actively policing such cases, and maybe doing the math that GM's bean counters were clearly incapable of back when the deals got signed.

Why didn't the CAW bean counter do that math before CAW voted in favour of the deal?

You keep writing as though the only parties at the table were the government and GM, but CAW was there, and CAW had to sign off on this deal too.

The average GM worker may be none to educated but they collectively appointed experts to negotiate on their behalf so it is nonsense to say they weren't informed of the risks they were taking--not only taking, the risks THEY imposed on GM via their wage demans.

They knew full well the risks they were taking, and now that it's materialized as an issue they're tying to walk away??

 

[Malibook]

Reading you article, McGuinty admits the province's obligation (moral for sure, and doesn't deny legal), but focusses on not having the ready cash.

Doesn't deny legal?
Can't you read between the lines?
If there was a legal obligation, there would be no talk of not bailing them out.
This wouldn't be an option or a topic of conversation.
Experts would not be talking about the fund's potential collapse.
The opposition would not be pointing out the political ramification of bailing them out.
CAW would not be planning a protest at Queen's Park.
Why don't you go tell the CAW that they are wasting their time and there is nothing to worry about because you say so?

 

[oldjones]

Why should the Gov't be on the hook for anyone's pension plan other than the one they run for their own employees?

Sorry, tough titties would be my answer.

The gov't should not be obligated to back up anyone's pension plan. Sorry, but if you worked for GM and GM goes broke, you figure it out for yourself.

This is why I am all for all employees having a self directed RRSP that part of their salary goes into and it's LOCKED in. They can't touch it till they're 65.

I knew this one chick who was an HR director at some company in Brampton where they had and RRSP plan and most of the loogins who worked in the plant would promptly withdraw any money in their RRSP account as soon as it was there in order to buy beer.

I could agree, but fact is, the Government set up the pension insurance plan, ran it, and said they'd pay up if the accumulated premiums—which it let GM postpone—were not enough. What they shoulda done was require the full amount of contributions be deposited with them, not held by the companies, and should have published full actuarial analyses for the next round of contract talks. But they made the first law—which the companies loved, not the second—which the unions would have loved, and so we're stuck with them paying now. Even if we hate it.

You're RRSp thing's great until the Crash of 2029 when planholders get left with nothing because they couldn't get at their locked-in RRSPs. There is no way to guarantee future returns from investments.

In the end we have nothing to rely on except each other and the promises we make. Have you cast an eye on the money you have in the bank recently? Just bits and bytes, man. Not even paper. And the paper doesn't even say "promises to pay to the bearer" any more. We just trust they will pay. Just like the pensioners trusted GM and the Guarantee Fund.

That's why we, as the people of Ontario, have to honour the promise we made to all sorts of pension plans not just to GM's. And to Malibook's depositors, and everyone else who makes a contract government's part of. Running an orderly marketplace is as prehistoric a role of government as hiring bullyboys to make an army.

If we don't keep our word, we have nothing. Let's focus on making sure the villains who ran GM into the ground, breaking promises to us, to suppliers, to workers, to buyers get nothing, certainly not any say in running car companies. But the pensioners kept their end of the bargain and now they're helpless. They deserve better than to be robbed by the able-bodied just because they resent taxes.

We sould be using that resentment to ferret out the Wagoners and GMs of the future.

 

[moresex4me]

There is no way we should be bailing these guys out, company or union employees. They are both responsible for the fiasco that is GM. Why should I take money away from my family to cover theirs? My RRSP's tanked, is the government going to cover my losses as well? This is a load of crap, sorry, but it is.

I agree that these guys have been paid way too much over the years for limited skill labour, and poor quality on top of that. Their sense of entitlement should not extend to my pay check, sorry guys, that's the way most people in the province are going to feel.

 

[Malibook]

fact is, the Government agreed to set up the pension insurance plan, run it, and pay up if the accumulated premiums—which it let GM postpone—were not enough.
... and so we're stuck with them paying.

That's why we, as the people of Ontario, have to honour the promise we made to all sorts of pension plans not just to GM's.

Are you making this stuff up?

I can't see anything that backs up what you claim and the politicians and experts are certainly not backing up what you claim.

If we were running surpluses and had no debt, I would agree with you.
Unfortunately, the reality is that we have massive deficits and debts and we are in no position to bail them out.

Like I said, if they bail them out, they had better set up a similar pension plan for the majority of taxpayers who have none.

 

[james t kirk]

You're RRSp thing's great until the Crash of 2029 when planholders get left with nothing because they couldn't get at their locked-in RRSPs. There is no way to guarantee future returns from investments.

In the end we have nothing to rely on except each other and the promises we make. Have you cast an eye on the money you have in the bank recently? Just bits and bytes, man. Not even paper. And the paper doesn't even say "promises to pay to the bearer" any more. We just trust they will pay. Just like the pensioners trusted GM and the Guarantee Fund.

.

.

Yeah, but....

If it gets that bad that the Royal Bank, BMO, CIBC et al go broke it's not really going to matter because the result will be social anarchy anyway and we are ALL down the girgler.

Better get a gun, some bottle water, and brick up the windows then.

 

[Rockslinger]

CAW back then demanded that the workers be paid money

CAW more than "demanded", they used "Somali pirate" negotiation tactics. They threatened to shut down the plants. In effect, holding GM hostage. To be perfectly frank, the CAW would push your mother off a high cliff if it meant they get an extra 2 cents per hour.

 

[oldjones]

Why didn't the CAW bean counter do that math before CAW voted in favour of the deal?

You keep writing as though the only parties at the table were the government and GM, but CAW was there, and CAW had to sign off on this deal too.

The average GM worker may be none to educated but they collectively appointed experts to negotiate on their behalf so it is nonsense to say they weren't informed of the risks they were taking--not only taking, the risks THEY imposed on GM via their wage demans.

They knew full well the risks they were taking, and now that it's materialized as an issue they're tying to walk away??

Union negociators are there to get the best deal out of the company. The company's negociators are there to get the best deal out of the workers. Didn't hafta be that way, but companies fought tooth, nail club and machine gun against workers having any right to bargain collectively at all. That's why they're across the table like enemies, instead of around it like colleagues They still don't let them see any more of the books than you, I, or Jo Public. "Trust us, we can afford this future obligation even though we can't afford an hourly raise, our annual report says we're making money."

Yet you say the unions are at fault for not saying, "You can't afford that pension you've promised and we're striking until you reduce it to something reasonable."

To which GM says, as it did, "We can afford it, trust us."

And the members say, "Sure, we'll give up six or eight weeks pay and walk the line in the dead of winter to get less. Damn those GM bastards for promising more!"

Gotta say, your version wins in the comedy contest.

But you're smarter than to think GM, and its bargaining startegies were controlled by anyone but GM guys who everyone at the RenCen believed were well entrusted with getting contracts in GMs interests. That was never the business of UAW or CAW guy. The more anyone asserts the car companies are broke because the unions did it, the more they assert by implication that those GM guys weren't up to their jobs.

If they weren't and the union guys were so much more successful. They shoulda been running the companies. Couldn't have been worse.

Point is we're about a decade late pulling this plug. 'Cause eveyone let the companies of the hook, contract after contract.

But c'mon Blame the Union is a stupid, dead issue. No one's shown the math that's proved labour costs killed anybody, they're just the easiest savings to grab. And no one's explained how competent car guys made such bad deals contract after contract. And such bad cars, year after year.

Let alone why this has anything to do with what GM promised they'd pay Rosie the Riveter in her old age.