Seattle Times | After flying Army helicopters in Vietnam and then piloting United Airlines jets for more than two decades, John Balkenhol of Marysville was looking forward to retiring to his Montana vacation spread.
But when bankrupt United transferred its huge pension obligations to the federal government last summer, his maximum benefit was nearly halved. Now the 60-year-old Balkenhol is looking for work. "It's not easy to find a job flying, at this age," he says.
Like hundreds of thousands of workers and retirees across the country,
he's getting a crash course on America's faltering pension system.
He's learned that a company like United can drop its pensions in the
government's lap when they get too expensive. That pension benefits
he'd been promised years ago can be cut. That the government's pension
insurer is itself facing a huge deficit.
Throughout the Northwest and around the nation, workers have discovered their employer can unexpectedly shut down a healthy pension plan, or "freeze" it to exclude new hires and halt the growth of benefits for existing employees.
The list of companies that have dumped their pensions onto federal regulators over the past few years — often slashing retirees' checks in the process — reads like a Who's Who of industrial America: Bethlehem Steel, US Airways, Pan Am, Kaiser Aluminum. The federal Pension Benefit Guaranty Corp. (PBGC) has $56 billion in assets but $79 billion in current and estimated future liabilities.
For each failed plan taken over by the feds, hundreds of mostly smaller plans, affecting tens of thousands of workers, are shut down each year, further hollowing out the traditional pension system.
Balkenhol joined United in 1979 and (after a five-year furlough in the early '80s) retired in January 2005 — days after the airline defaulted on its pilots' plan. Fearing that a federal takeover would end up eviscerating his pension, he took some as a lump sum last year and used it to pay down as much debt as he could, even though he knew that could cut his monthly check.
Still, Balkenhol was stunned when he got his first benefit estimate from the PBGC. Instead of the $4,700 or so a month he had earned under United's plan, Balkenhol would receive only $1,074. That likely was because of three factors: his lump-sum payout, a cap on the federal insurance and the fact that he retired before age 65 — even though commercial airline pilots are forbidden to fly after age 60.
Now, instead of traveling with his wife or relaxing in Montana, Balkenhol expects he'll keep working — "as long as health holds out, I guess.”
Written by Drew Desilver; from the Seattle Times, April 4, 2006 © The Seattle Times Company. All rights reserved. Used with permission.
Working with our partners, EOI has developed an innovative proposal, dubbed Retirement Security Accounts (RSAs), to provide Washington workers and small businesses with the option of a professionally managed, portable retirement plan.
Social Security has been a success for seven decades - and the program can easily continue to provide economic security to all Americans through the 21st century.
Using payroll deductions and optional employer contributions, RSAs will provide an easy way for individuals to save for retirement, and help small businesses make a retirement plan available to their workers.
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