February 28, 2002 (PLANSPONSOR.com) - The number of
newly unemployed claiming benefits increased last week, while
the key four-week moving average edged down to its lowest
level in six months, according to data from the Department of
Labor.
The DoL’s latest jobless claims report shows the number
of Americans filing for benefits for the first time
increasing by 17,000 in the week ending February 23 from
the previous week’s revised figure of 361,000. The DoL had
originally reported that the previous week’s initial claims
had risen to 383,000.
The closely watched four-week moving average, which most
economists consider a better indicator of the unemployment
situation, dropped to 373,000 in the latest week, from
376,250 recorded a week earlier.
February 27, 2002 (PLANSPONSOR.com) - There may be
another Enron pension surprise coming - but taxpayers
shouldn't reach for their wallets just yet, despite early
reports. The online version of the February 27 Wall Street
Journal cautions that 'US taxpayers could be on the
hook' for losses in Enron's pension plan.
Based on 2000 SEC filings, the Journal report estimates
that the Enron pension plan might be underfunded by $4
million, rather than overfunded by the $112 million
reported in those same filings. Of course, the article goes
on to say that the real damage could be much greater – all
under a headline that screams “U.S. Taxpayers May Have
to Pay Enron Workers’ Pension Benefits.”
OK, should the Enron plan actually turn out to be
underfunded (and it might), the Pension Benefit Guaranty
Corp. (PBGC) – insurer of the nation’s private pension
plans – might have to step in. Of course, the PBGC
has been running a healthy surplus since the late
1990s. And while the market has been rough on all
portfolios, last May PBGC Acting Executive Director John
Seal noted that the agency ended Fiscal Year 2000 with a
$9.7 billion surplus – the 5th year consecutive year of
surpluses in a row, by the way.
Prior to those surpluses, the PBGC racked up 21
consecutive years of deficits – none of which translated
into a taxpayer bailout, mind you. The PBGC does not
draw federal funding. Instead, it is funded by
premiums paid by defined benefit programs. However,
in the unlikely event that the PBGC was drawn into a
financial crisis, presumably the federal government would
step in in some fashion – and I suppose one must concede
that ultimately taxpayers might have to shoulder that
burden.
Still, the headline seems disingenuous at best,
particularly since there appears to be a real pension
crisis looming elsewhere.
Steel Deal
While it hasn’t yet engendered the same kind of
sweeping Congressional interest drawn by Enron, the
burgeoning financial problems of the nation’s steel
industry threaten to have a much larger impact – both in
terms of workers and the security of the pension system
overall. In fact, the top five steel producers
account for more than $10 billion in unfunded pension and
health care obligations (see
Steel Exec: Consolidation Depends on Government
Benefits
). We’re not talking about millions or even
hundreds of millions – we’re talking BILLIONS.
And there are real live people out there now – current
workers and retirees – who are confronted with no
retirement, no health care, no job (see
LTV Retiree Health Plan Running Out of Cash, Time
) – and, unlike many Enron workers, pretty dim prospects
for future employment. Enron laid off just 4,000 of
its 21,000 workers – and continues to operate under the
temporary ‘shelter’ of Chapter 11. LTV Steel
recently laid off 7,600 – but the firm’s recent
acquisition by private investment firm W. L. Ross is
expected to impact the size, if not the availability – of
health and pension benefits of some 85,000 LTV retirees and
their dependents.
Misleading statements and practices are what got Enron
into trouble in the first place. It’s time we
quit obsessing about Enron – and started taking a serious
look at the bigger picture.