The US Treasury has now allowed a private pension fund to slash the benefits it had agreed to provide. The Treasury has little choice; it’s that or bankruptcy for underfunded private pensions. From Birch Gold Group via theburningplatform.com:
Public pensions are falling apart around the country, but now the security of private pensions is being threatened as well. Based on a new Federal law passed in 2014, the U.S. Department of the Treasury just made a shocking decision to allow a Cleveland-based ironworker pension to start slashing member benefits as early as next month. Now, experts fear other struggling private pensions could quickly follow.
Opening Pandora’s Box on Pensions
It’s always been assumed that both public and private pensions will find a way to fix their shortfalls and pay out their obligated benefits – with public pensions using government cash (from budget cuts and tax hikes), and private pensions relying on corporate profits and cash reserves.
But today’s economy is making those old pension safety nets unfeasible; governments are running out of money, and private sector performance is plummeting.
Now, pensions are starting to consider just how obligated they really are.
Public pensions started bending the rules first, which is less surprising since lawmakers have a personal interest in legislating away plan obligations to avoid gutting government budgets. Private pensions don’t have the same “power behind the throne,” though. They’re legally bound by federal law to pay out their guaranteed benefits.
Well, at least they were legally bound until 2014, when the law changed to allow private pensions to cut benefits upon approval of the Treasury Department.
Now, two years later, the Treasury Department is approving the first request for approval, and critics believe it could trigger a domino effect that strips millions of private pension members of their benefits.
To continue reading: U.S. Treasury Lets Private Pensions Slash Benefits for the First Time In History
