The Financial Time (FT) today came out with a new report on how underfunded business and company pensions are for many workers they have contracts with. With sales and profit margins falling dramatically during the past 2 years, not only have major companies cut the amount they donate towards these funds, but many small businesses have stopped funding plans altogether.
The shortfall in US labor union pension funds is huge and growing rapidly. The latest data, from 2009, from the PBGC showed that these multi-employer plans were 48% underfunded with $331bn of assets to support $686bn of liabilities - and it has hardly been a good ride for those asset values since then. Critically, as the FT notes today, recent changes by FASB has enabled Credit Suisse to estimate shortfalls more accurately and it paints an ugly picture. - Zerohedge
Data courtesy of FT
To date, the government and corporate world have been able to hold off anger in the public sphere, even as the continuing high unemployment rates have not been addressed since 2008. However, should the stock markets fall, and pension and retirement accounts continue to drop to dangerous levels, then the reaction by unions and workers expecting this money to survive after their working years will make the Wisconsin union battle seem like a playground shoving match.