Ford Motor Company (F) and General Motors Company (GM): Why Social Security Won’t Bail Out Many Detroit Workers

The Detroit debacle
Of course, it remains to be seen whether Detroit workers will actually suffer pension reductions, and legal wrangling over benefits could continue for years. If they do, though, one other problem they face is that unlike private employers, government entities aren’t eligible to have pensions insured by the Pension Benefit Guaranty Corporation. In the past, the PBGC has protected workers of US Airways Group, Inc. (NYSE:LCC), United Continental Holdings Inc (NYSE:UAL)‘s United Airlines, and many other formerly bankrupt corporations whose workers had benefits cut.

What all of this makes clear is just how high the stakes are in the bankruptcy proceeding, both for Detroit and for public-sector workers around the country. If benefits are cut, it could set a dangerous precedent that other cities across the nation could follow. For those who lack a previous work history covered by Social Security, an adverse finding from the bankruptcy court could leave them completely on their own to salvage their retirement prospects.

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The article Why Social Security Won’t Bail Out Many Detroit Workers originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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