PENSIONS United woes highlight larger issue

Some worry other companies or industries might follow suit.
NEW YORK (AP) -- On the morning after United Airlines won the right to walk away from his pension, Jerry Jedynak woke up groggy and depressed.
"Imagine being with a woman for 31 years and having that relationship shattered one day to find out you've been lied to and cheated," said Jedynak, a customer service agent at Chicago's O'Hare International Airport since 1974. "You're going to ask yourself, were you a fool? Why didn't I see it coming?"
Jedynak and his co-workers at United aren't the first to feel betrayed. First in steel, now in airlines, tens of thousands of workers and retirees counting on promised pension checks have watched troubled companies turn over the responsibility for underfunded benefit plans to the federal government.
The dilemma now confronting United workers after a ruling late Tuesday by a federal bankruptcy judge could eventually be repeated at other airlines, and there are growing worries about underfunded retirement plans maintained by auto and auto parts makers.
But for most other workers, the more likely threat is that their healthy companies with relatively sound pension plans will end them and freeze benefits -- often as part of a switch to a 401(k) plan -- a route already taken by IBM Corp., Avaya Inc. and hundreds of other employers.
That change, long in the making and increasingly widespread, is chipping away at long-standing expectations about retirement, even as lawmakers debate what to do about the other underpinning of life after work -- social security.
"Yesterday's ruling is a real landmark, not only for these industries, but for American culture," said William Rochelle, a New York corporate bankruptcy attorney. "What we have in politics and business today is an assault on the well being of retirees."
Declining security
The demise of pension plans has accelerated over the past decade, as companies increasingly shifted away from the expense and unpredictability of traditional retirement plans and moved to 401(k)s and other defined contribution plans.
The federal government's Pension Benefit Guaranty Corporation has seen the number of traditional pension plans it insures drops from a peak of about 114,000 in 1985 to about 31,000 last year. The number of people covered by those plans remains relatively stable, but the balance has shifted dramatically.
In 1985, there were 31/2 active workers for every retiree covered by a plan. Today, the numbers are equal, reflecting the fact that employers have eliminated plans for many of their new workers and are coping with obligations owed to longer-living retirees.
Situations like the one at United, a unit of UAL Corp., reflect a somewhat different dynamic. It began in the steel industry in the 1990s, as companies staggering under global competition sought to restructure and free themselves of the weight of retirement obligations, often mandated in union contracts. One after another, companies like LTV, Bethlehem Steel and others jettisoned their pension plans under the protection of a bankruptcy court, turning them over to the PBGC.
The government agency makes good on many smaller pension checks. But it sets a cap on benefits, limiting payout to formerly high-paid workers who were expecting larger pension checks.
Other airlines, industries
Pension industry experts are reluctant to predict whether other companies or industries might follow suit. But most acknowledge they are watching General Motors Corp. and Ford Motor Co. -- both of whose bond rating were downgraded to junk status last week by Standard & amp; Poor's.
A recent report by Lehman Brother estimated that GM's projected benefit obligations are nearly five times the company's entire market value, a ratio second only to Delta. Ford, auto parts maker Visteon Corp. and Goodyear Tire and Rubber Co. are also in the top 10.