Forum Post: Moving Ahead for Progress in the 21st Century
Posted 11 years ago on May 8, 2013, 12:41 a.m. EST by Shule
(2638)
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How do they make these federal laws sound so good (sic)? Take this one I learned about yesterday from a letter sent to me by the company I work for informing me about how my pension plan just changed. (If you're one of those few lucky folks who actually have a pension plan also, you probably got a letter too.) The letter tells me of a change in the federal law called "Moving Ahead for Progress in the 21st Century (MAP-21) which allows companies to determine their pension fund "liabilities" using an interest rate average computed over twenty-five years instead of two. As interest rates were much higher twenty something years ago, this allows the corps to calculate the money they must contribute into people's pension funds with a higher average interest rate which in turn results in a lower contribution number; i.e. the corps can now put less money into their employee's pension funds. Sweet (for the corps), and they call that progress.
If interest rates don't start going up anytime soon existing pensions plans may go into default.
As soon as interest rates start going up, all these bullshit bonds that have been financing this mess for the last 8 years are going to take a serious hit, and then we are back to the Bush/Reagan/CLinton/Bush tactics of "lower the rates" to spur growth bullshit.
There is no end game when interest rates are at 0 and the gov is bonding itself into oblivion.
Yes, unfortunately that is probably true. And our pension plans which are now going to be underfunded with go with it all.