Last week, President Barack Obama quietly signed a new law that allows companies to contribute billions of dollars less to their workers' pension funds.
Last year, Obama tore into Wisconsin Governor Scott Walker after he signed a bill blocking public sector unions from collective bargaining on pensions. However, as the political winds shifted in an election season, the President stayed out of Wisconsin and focused on Gay marriage while basking in a Supreme Court decision upholding his 2010 health care bill.
The President signed the the new pension bill that opponents say could weaken pension plans that millions of Americans count on for retirement with little fanfare, according to a USA Today report.
Many companies are already freezing or getting rid of pension plans which could be one reason Mr. Obama did not oppose the bill. Indeed, some expect the pension bill passed by a Democrat-controlled Senate last month and signed Friday by President Barack Obama may not affect the $1.9 trillion in estimated pension fund assets because companies will continue funding them at current levels. However others argue the legislation gives employers the freedom to limit or jettison remaining pensions.
Obama’s action is bad news for unions who have long used collective bargaining to increase pension benefits for union workers, often to the detriment of taxpayers and companies that cannot afford the long-term payouts to retirees and others.
However, some union leaders are falling in line behind Obama on the issue. "That wouldn't do our members any good" if the government forces companies to make pension contributions they can't afford, said Karen Feldman, benefits policy specialist for the AFL-CIO, the giant labor federation that supported the legislation. The statement is a far cry from the outrage expressed by union leaders against Governor Scott Walker in Wisconsin.
AARP lobbyist Debbie Chalfie said the seniors organization was concerned that companies contribute the right amount to their pension funds, but at the same time, "We want to make sure employers continue offering these plans."
The Pension Rights Center that usually opposes any legislation that could limit pensions also gave Obama tacid approval for signing the bill that might reduce pension plans. Executive Vice President Karen Friedman said the group was "sympathetic to business concerns" that companies have been hurt by the recession. Friedman added she is still worried that reducing corporate pension contributions could hurt consumers – a rather bland show of opposition for that pension organization.
University of Pennsylvania insurance professor Olivia S. Mitchell says the fact that Congress can change the formula "does not mean that pension funds will be able to defy the laws of economics and finance."