lomiller
Penultimate Amazing
- Joined
- Jul 31, 2007
- Messages
- 13,208
In ordinary salary negotiations, the person paying the salary is on one side of the negotiating table. If they can't afford to pay the demanded salary, then they won't accept the deal.
Not an accurate description of the situation.
When pensions are negotiated the employer obligation to pay those pensions are spelled out. They know how much they are supposed to be setting aside to meet the commitments they are making.
For various reasons, some of which are even valid apparently, government pension plans tend to get under funded. They knew what it would cost to pay those pensions and deliberately made lower contributions. After years of not paying in what they were supposed to they decided to simply make a low retroactively saying they don't have to pay after-all, effectively confiscating the money they were supposed to have been contributing all along.
I'm not sure if public sector pensions were involved but in the late 90's it was all the rage for companies to simply take money out of pension plans they deemed to be "over-funded" and give that money to their shareholders.
They calculated that they money they were contributing as part of their contract with the employee were too large and that now they had more money then they needed to pay their pensions so they just took the "extra". Then of course the stock market peaked and they discovered these pensions were now underfunded. Today most of pensions have been reworked into lower paying plans based on the available money but I bet the companies that raided their employee's pension plans didn't give any of the money back.