A man walks past the Taiwan Nan Shan Life Insurance building, a subsidiary of the troubled global insurance giant American International Group (AIG), in Taipei.   (Photo by AFP/Getty Images)

Insurance agents at Nan Shan Life of Taiwan scored a preliminary victory in their battle to retain control of their pension funds when the company changes ownership.

Disgraced insurance giant AIG is trying to auction off Nan Shan, Taiwan’s second largest life insurer.

Last week, Nan Shan’s union said it would not rule out a strike to safeguard its pension plan.

The union’s 36,000 members want to stop AIG from treating the $437 million pension fund as an asset of Nan Shan to be sold off to the highest bidder.

The union says that the fund is not AIG’s to sell. When a company pays into a worker’s pension fund, that money belongs to the person who earned it. The union is making its case to the public in front page newspaper ads.

Taiwan’s top financial regulator gave the union a preliminary victory this week when he ruled that the pension dispute must be settled before Nan Shan can change hands.

Nan Shan management announced on Thursday that it was willing to jointly manage the fund with the union, but the union wants the money back. Nan Shan says only AIG can make that call. AIG has reportedly hired consultants to look into the matter.

About a dozen firms have submitted bids to buy Nan Shan, but only about half that number are still in contention. The financial press is reporting that the uncertainty surrounding the pension fund is causing some bidders to reconsider how much the company is worth to them.

So, AIG might not get as much for Nan Shan as it initially hoped. The financial press is reporting this like it’s some kind of tragedy, but it’s really just the market at work. A company with binding obligations really is worth less than a company that’s free and clear. Pension obligations are serious business. If buyers hoped to raid Nan Shan’s pension fund, they may be sorely disappointed—but the company’s insurance agents won’t be.

Posted by Lindsay Beyerstein  ·  + share/save