>From: Andrew Fildes
>I still can't understand how a corporation can have ANY access to pension
>funds, bankruptcy notwithstanding. Reinvesting pension funds into the company
>or for the benefit of the company would be unethical, surely, if not actually
>fraudulent?
The way it works here in the US is that a Company can generally only pull cash
out of "overfunded" plans - plans that have more assets than needed to pay
benefits under the plan. Virtually no plans are overfunded these days thanks
to the stock market.
For the other scenario, where the company hasn't put enough funds into the plan
and it's underfunded, a company may be able to shed the underfunded liability
in a bankruptcy, which is where the PBGC (Pension Benefit Guaranty Corporation,
a government entity) takes over the liability under the plan. The PBGC has
limits on benefit payments, so people with the bigger pension payments under
the plan may take a payment haircut. The PBGC is funded by insurance premiums
all plans/companies have to pay.
No one will be "left out in the cold," regardless what you may hear in the
press.
Steve Troy
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