The Government Accountability Office, Congress' investigative agency, has reportedly agreed to study how the airline industry handles its pensions. The news comes as United Airlines prepares to emerge from bankruptcy, having jettisoned its employee pensions.
The investigation was requested by two members of Congress, Rep. Ed Markey (D-Mass.) and Rep. George Miller, (D-Calif.), according to the Aircraft Mechanics Fraternal Association.
"Massive failures of pension plans at United Airlines and other companies are placing an enormous strain on employees and retirees who worked hard to earn their pension benefits," Markey said.
Markey says there may be quite a bit for the GAO to investigate. He points to alleged conflicts of interests cited in a Securities and Exchange Commission report on the subject. Markey said the report details secret financial deals between pension advisors, money managers and others, that may have negatively impacted pension fund investments.
The union is calling for a full-scale federal audit of airline pension plans. The AMFA says United and US Airways have used bankruptcy protection to set aside pension liabilities, pushing off retirement plans on the taxpayers.
A federal agency, which acts as pension guarantor of last resort, is running a significant budget deficit. Even so, it pays only a percentage of the defaulted pensions.
Now with Delta Air Lines and Northwest Airlines currently in Chapter 11 bankruptcy, union officials say those airlines will also have the ability to negate contracts and jettison their pension plans.