I can remember the first company I worked for, a national airline.

It was 1966, and I was a freshman in college. I loaded airplanes with bags, handled air freight, and waited on passengers. I loved my first job and I loved the company.

To see them now is an exercise in disgust; the airline has been through bankruptcy, converted from a respected carrier to a cattle mover, and now has gone the way of many corporate companies by using a congressionally approved system: outsource pension liability.

Many other large companies have all followed the same plan; let an insurance company manage the liability of living up to pension promises. In the past few years, many companies have followed this system, the end money manager in many situations has been The Prudential. Don’t get me wrong, The Prudential is a well-managed, much-admired company and certainly able to live up to any promise it makes.

It boils down to a simple formula, if you know exactly how much you will owe, the cost is then contained, no surprises. The Prudential is a solid money manager and is well prepared to manage future income liability for millions. The companies doing the outsourcing are then able to better project future income and thus determine possible profit projections.

Of course, the winner is those who have invested in the company, more than likely, the value of stocks will increase.

Since the early 2000s, about 100 companies have shifted an estimated $900 billion in future pension liability to insurance companies to manage future liability. Is there anything wrong with this?

On the surface, no, but looking deeper, one has to wonder why so much liability being transferred to a few insurance providers? Do the assets required to maintain these accounts match up with the liability? Now add two difficult items to analyze, low-interest rates and a much longer life expectancy. Will insurance companies be able to manage this volume of liability? What happens if there is ever a default? Will the government intervene and help? In today’s political environment, it seems doubtful.

Critics have fears based on capital reserves, and will they have enough?

If not, would the U.S. be facing another financial crisis? The banks would not be blamed this time but rather institutions traditionally associated with safety and security, those with rock-solid balance sheets: the life insurance industry.

No one knows for sure how serious the issue is, but industry watchdogs are undoubtedly aware of recent foreign buyers of insurance companies who have assets parked offshore. Recent buyers are now domiciled in Japan, China as Bermuda, are they fully integrated into our economy?

The life insurance industry is highly regulated by each state department of insurance, and a new regulation adopted by all 50 states should help. I fully understand the outsourcing of liabilities, and I certainly have no issues with the practice, it just seems to me that an awful large of money is in play here. Money that so many Americans are depending on for a happy and guaranteed retirement.