What's killing Sears? Its own retirees, the CEO says

[MichMan]

59. Sears is in the situation of many old established companies

… that have lost market share over the years and downsized. They intended to pay as you go for retirees and it worked for many years until sales were down and the number of employees decreased to the point where the ratio of retired to active was unfavorable. I'm not saying that's right, but that is how things turned out.

Many state and local governments have the same issue with underfunded pensions. Detroit was an example and their retirees had to decide to agree to a cut or risk it being settled in court. The Central States Teamster multi employer pension fund pays out $3.50 for every $1 they receive in current contributions, so every year the fund gets smaller and smaller.

One of the few exceptions is the Post Office and many are angry that the PO is forced by law to pre pay into the retirement fund, but I bet their workers feel better about it.

If in fact Sears does go bankrupt, I suspect the pensions would be turned over the the PGBC and the retirees will be forced to take a cut. I have a 401k and maybe it isn't as bad as some people make it out to be.