American Airlines wants to terminate the pensions of 130,000 workers as part of its bankruptcy proceeding. The move would be good for the company’s balance sheet, but would it be good for America?

American’s pension termination would be the largest in U.S. history. The airline wants to end the plans and turn them over to the Pension Benefit Guarantee Corp (PBGC), a government-sponsored agency that insures most private-sector defined-benefit pensions through premiums paid by plan sponsors.

The airline would instead offer workers a 401(k) plan with a company match. That would have value to workers, but nothing close to the retirement security provided by a pension’s guaranteed lifetime payments.

Josh Gotbaum, the PBGC’s director, has mounted an unusual public campaign against American, arguing that the airline hasn’t made the case that it needs to terminate the plans. That question will be decided in bankruptcy court, but American’s story puts a spotlight on broader questions about the future of traditional pensions.

Learn more in my column this week at Reuters Money.

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