Debate question: Resolved: United States corporations should honor all prior commitments to employee pensions?

Question

Resolved: United States corporations should honor all prior commitments to employee pensions.

what are some cons to this? like i have to write a con speech for debate, so why SHOULDN'T US corporations honor all prior commitments to employee pensions?

let me rephrase this into terms that people will understand

why shouldn't US corporations have to honor all piror commitments to employee pensions (pensions are like money companies give to retirees)

Answer 1

Edit: Why shouldn't companies have to honor their commitment? Well, for starters, often times they can't afford to. It's not always a matter of profitability. More often than not it's impossible to honor the terms of pension agreement. The money just isn't there. In order for a company to exist it must be profitable. If pension contributions prevent profitability then the company goes out of business. Then the employees are out of both a job and a retirement benefit. Of course there are exceptions, but in cases like the airlines and other unionized labor markets, the unions made unrealistic demands.

Pension and Defined Benefit (DB) plans have been phased out for most companies. They have been replaced by 401(k) (aka Defined Contribution, or DC) plans. The reasons for this are many, but it all boils down to cost. DB plans are too expensive. Allow me to illustrate:

DB plans are 100% employer funded. They operate in such a way as to promise a set amount of money at retirement. The amount of funding due each year can vary based on the prior year's investment performance. If the investements perform well then the company doesn't have to fund as much to meet the project benefit requirements. However, if the investments perform poorly then the plan sponsor is required to pony up not just the normal projected contribution, but also make up for the assets lost due to poor investment returns.

How is the annual employer contribution formula determined? The plan sponsor must hire an actuary to run a series of mathematical tests to determine the amount. I won't bore you with details, but it has a lot to do with life expectancy and other ways of predicting the future. In the end the amount of the annual contribution is on a sliding scale and is subject to a number of factors out of the employer's control.

What is the answer to the cost and unpredictibility of DB plans? DC plans are. In Defined Contribution plans, the rules state how much the employer will deposit into a participant's account. That amount can vary due to a number of factors such as employee participation, company profitability, the result of discrimination tests, etc.

What makes the DC more appealing than the DB is that it is much easier to administer and the plan has predictable costs. It is also more appealing because the participants can contribute a portion of their own salary by way of tax-deferrred 401(k) contributions.

Answer 2

I believe the confusion was that con means the reason why they should not honor the pensions versus pro meaning in favor of corporations honoring the pensions

This is a major issue in the USA while it is not highly publicized in the newspapers it is a problem

I believe companies should honor pensions, back in the day this offer of good retirement pay guarantee by the employer was an important factor in why people worked for the company and put the hours in. Many people stayed at the job irregardless of the pay, working condition just for the health benefits and pension, both of which are going away

The companies point of view is they must set aside all this cash from earrings to ensure the payout of the health benefits and pension, Hence the company looses much working capital because it must be placed in secure investments, need people to manage the whole process, a very expensive part of the corporation

that is why corporations want to dump them on the federal government, good example eastern airlines, has gone bankrupt but the pension part is alive and well plenty of cash plenty of staff just to manage the millions of cash in the pension fund

my point the corp where well aware of this cash out lay when they started but did not care becasue they received loyal employees in exchanged, they have a contract with there employess, but now after the employess have given there time the cops what to change the deal, now after the fact they change the rules and leave these people in without an option in their latter life to do something

Answer 3

I think I'd want to rephrase the question and say "under what circumstances should they not...."

If the senior officers and board have taken deep pay cuts, and the company still faces bankruptcy without more cuts, then the responsible thing to do is to continue operations for the benefit of shareholders, employees, vendors and clients, and let the retirees take a hit, too.

Answer 4

Because it would impede their ability to use that money to increase the paychecks of their CEOs and CFOs and aren't they the ones that count? Haven't you heard the whole logic of trickle down theory, the theory that the 'little people' call piss up a rope? Its so much more important that stockholders get their slice of the pie before the elderly who have devoted their lives to the corporation. I mean, really if they were that all fired important, wouldn't we have paid them more in the first place? You can't ask a man who makes $210 million dollars for messing up a formerly decent company to forgo his new boat can you? Have you looked at marina charges lately? Its a club, and suckers like the average worker need not apply.

Answer 5

Don't you just love forensics? My suggestions would be to go with the ideas in the other comments and to try not to be too specific...you'll just get torn apart if your details are even slight off for the con. Good luck.=)