2005-1-6
I'm Gwen Outen with the VOA Special English Economics Report.
Last week, a government agency in Washington announced that it
wanted to take over a retirement plan for pilots at United Airlines.
This pension plan is supposed to hold nearly six thousand million
dollars. But it has about half that, and United is in financial
trouble.
Retired Americans get some money each month from Social Security.
This is a federal program financed by employment taxes. But millions
also depend on retirement plans offered by employers.
One such plan is called a four-oh-one-k, named after part of the
tax law. Both the employee and the employer pay into the plan. The
money they put in is not taxed. It is invested in stocks and other
products. How much a retired worker gets depends on how much the
investments return.
But a pension guarantees the amount that a person will receive.
Pension plans are no longer very common.
Federal law requires employers to keep enough money in pensions
to meet expected payments in the future. In the nineteen nineties,
many companies did not need to pay into their pensions. A strong
economy meant that pension-plan investments were enough. But since
then, employers have had to make big payments. Some have found this
difficult.
United Airlines says it can no longer pay into the pension for
its pilots. The company also says it does not know if it can
continue to pay into three pension plans for thousands of other
employees. United is under bankruptcy protection from its creditors.
The Pension Benefit Guaranty Corporation is a government agency.
It has insurance programs paid for by employers. It also earns money
from investments. This agency takes control of pension plans that
fail or are in danger of failing. Its job is to make sure workers
receive their money.
Now the agency wants to block an agreement between United and its
pilots union. That agreement would end the current pension plan. In
return, the pilots would get an interest in the company once it
leaves bankruptcy.
The Pension Benefit Guaranty Corporation says it is trying to
protect United employees. The agency also wants to limit how much it
might be responsible for if United cannot pay its pensions.
Creditors of the airline support the move. But the pilots union
opposes it. The pilots could lose one hundred forty million dollars
if a court approves an immediate takeover of their pension.
This VOA Special English Economics Report was written by Mario
Ritter. I'm Gwen Outen.