Corporate America’s New Golden Goose
Last month, award-winning Wall Street Journal reporter Ellen E. Schultz published a book-length expose on how corporate employers, consultants and financial firms retooled retirement plans to increase profit and enrich executives at the expense of employees and retirees.
For example, thanks to rules put in place decades ago, by the end of the 1990s pension funds at many large companies swelled, enabling employers to fully pay their current and future retirees’ pensions well into the employees’ 90s without having to add another cent. But with an eye to profits — and a little statistical sleight of hand — companies used surplus assets to finance staff reductions, giving departing employees additional pension payouts rather than severance pay.
Then they cut benefits. This replenished the pension surplus and gave a boost to company earnings, turning “retiree benefits plans into cookie jars of potential earnings enhancements” and converting a “trillion dollars in pensions and retiree benefits into an immediate, dollar-for-dollar benefit for the company.”
Read an excerpt from Schultz’s new book below and hear her discuss her findings on NPR here. –ARK
WAIT, BEFORE YOU GO…
Retirement Heist explains what really happened to GE’s pensions as well as to the retirement benefits of millions of Americans at thousands of companies. No one disputes that there’s a retirement crisis, but the crisis was no demographic accident. It was manufactured by an alliance of two groups: top executives and their facilitators in the retirement industry—benefits consultants, insurance companies, and banks—all of whom played a huge and hidden role in the death spiral of American pensions and benefits.
Yet, unlike the banking industry, which was rightly blamed for the subprime mortgage crisis, the masterminds responsible for the retirement crisis have walked away blame-free. And, unlike the pension raiders of the 1980s, who killed pensions to extract the surplus assets, they face no censure. If anything they are viewed as beleaguered captains valiantly trying to keep their overloaded ships from being sunk in a perfect storm. In reality, they’re the silent pirates who looted the ships and left them to sink, along with the retirees, as they sailed away safely in their lifeboats.
If you're reading this, you probably already know that non-profit, independent journalism is under threat worldwide. Independent news sites are overshadowed by larger heavily funded mainstream media that inundate us with hype and noise that barely scratch the surface. We believe that our readers deserve to know the full story. Truthdig writers bravely dig beneath the headlines to give you thought-provoking, investigative reporting and analysis that tells you what’s really happening and who’s rolling up their sleeves to do something about it.
Like you, we believe a well-informed public that doesn’t have blind faith in the status quo can help change the world. Your contribution of as little as $5 monthly or $35 annually will make you a groundbreaking member and lays the foundation of our work.