Wednesday, October 20, 2010

December 15th Will Be a Big Day

A lot of what happens in Congress after the election will be focused on this. If you think Pelosi was kidding about snatching your 401(k), or about "equity and ownership" re-allocations, you're deluded.

On Nov. 1, the Financial Accounting Standards Board (FASB) ceases to take public comment on a new rule requiring that companies more accurately report liabilities they have from participation in multiemployer pension plans. Unless FASB is persuaded otherwise, the rule takes effect Dec. 15.

There are some 1,500 multiemployer pension plans in the United States, which are unique to unions. In these plans, multiple companies pay into the pension plan, but each company assumes the total liability.

Under “last man standing” accounting rules, if five companies are in a plan and four go bankrupt, the fifth company is responsible for meeting the pension obligations for the employees of the other four companies.

What this means is that companies with union labor often have pension liabilities that are several multiples higher than the pension expenditures they report — the Kroger grocery store chain shocked analysts last year when it disclosed its multiemployer pension liabilities more than doubled in a year to $1.2 billion. --RedState quoting Examiner

On 12/15, employers (like Kroger) will have to disclose their liabilities; in some cases, that will damn near eliminate their net worth.

(Why do you think that UPS paid a penalty of $3 BILLION to escape the Teamsters' Central States Fund?)

By the way, most of the building-trades pension plans are multi-employer, just like the Teamsters' plan is. How many local plumbing contractors (or electricals, or carpenters) can take this sort of hit?

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