Pensions Plundered By Corporate Greed, Says Author

Many Americans have been forced to put their retirement dreams on hold in recent years – their benefits essentially “robbed” because of corporate greed.

One decade ago, there was a trillion dollars, a quarter of a trillion in surplus assets, according to Wall Street Journal reporter Ellen Schultz. But instead of paying retirement benefits, corporations got greedy.

Schultz, author of the book Retirement Heist, believes countless corporations have been plundering retirement plans in a variety of ways, including:

• Siphoning billions of dollars from their pension plans to finance downsizings and restructurings and then selling the assets in merger deals.
• Paying so-called ‘golden parachutes” for top-level executives.
• Overstating the burden of rank-and-file retiree obligations to justify benefits cuts, while then using the savings to inflate executive pay and pensions.
• Hiding growing executive pension liabilities – which at some companies now exceed the liabilities for the regular pension plans.
• Purchasing billions of dollars of life insurance on workers and use the policies as informal executive pension funds. When the insured workers and retirees die, the company collects tax-free death benefits.
• Excluding millions of low-paid workers from 401(k)s to make the plans more valuable to the top-paid executives.

According to Schultz, these measures are commonplace today among many Fortune 500 companies, including household names like AT&T, Bank of America, JP Morgan, IBM, Indiana Bell, UPS, Cigna, General Motors, GM, Comcast, even the National Football League.

U.S. corporate pension plans now face a $388 billion gap – a bigger gap than during the height of the financial crisis. Meanwhile, companies blame the problem on the economy, higher costs and an aging workforce.

Schultz, however, says such assertions are false. “It didn’t have to happen,” she says, citing dramatic increases in executive compensation over the same time period. “As they’ve cut other people’s benefits with pensions being frozen, they have increased the benefits of the executives’ pay and pensions.”