When a federal bankruptcy judge approved UAL’s (United Airlines parent company) plan to transfer its grossly under-funded ($9.8 billion for that matter) pension plans to the Pension Benefit Guaranty Corporation (PBGC), the door was opened for other financially troubled airlines (and then other industries) to seek similar relief. The PBGC is a federally funded program which guarantees corporate pension plans and pays benefits when company plans fail. United’s unions are already planning to challenge the decision.
The transfer will cause some retirees to receive smaller pensions and this has many retired people worried. In one case, a husband and wife will see their pension income cut by approximately $10,000 per year. Since they cannot decrease their fixed expenses, the reduction promises to cause them significant problems in terms of maintaining their lifestyle.