Retirement Heist
How Companies Plunder and Profit from the Nest Eggs of American Workers
By: Ellen E. Schultz
Published: September 15, 2011
Format: Hardcover, 256 pages
ISBN-10: 1591843332
ISBN-13: 978-1591843337
Publisher: Portfolio/Penguin
"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", writes investigative journalist for The Wall Street Journal, Ellen E. Schultz, in her provocative and eye opening book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers . The author describes how a little over a decade ago, companies had more than enough funds in their company pension funds to pay two generations of retirees, regardless of their life expectancy, and today those pensions have largely disappeared.
Ellen Schultz provides evidence that through loophole exploitation, regulation that was ambiguous, and changes in accounting rules, companies transformed the pension funds into cash cows, tax shelters, and even profit centers. Not only have fully funded pensions for retired workers disappeared, but have been replaced by unfunded pension liabilities for retired executives, creating a real pension crisis for the companies. The author painstakingly compiles research data that demonstrates how employers drastically overstated their worker pension liabilities, lobbied for taxpayer bailouts, and secretly cut pension benefits while keeping employees and shareholders in the dark as to the activity.
Ellen E. Schultz (photo left) points out that while pensions for rank and file employees was being cut and even eliminated, enormous and unfunded executive pension funds were being created that far exceed the liability expected for the worker pension funds. The author names names, and the companies represent some of America's best known corporations. For Ellen Schultz, this full scale looting of pension funds is not an isolated incident, or even restricted to the largest corporations. Small companies, non-profit organizations, and professional sports leagues have also destroyed their employee pension funds.
Ellen Schultz describes some of the abuses of pension funds as:
* siphoning billions of dollars to pay for downsizing and merger deals
* Overstating employee funds to defend cuts while boosting executive pensions
* Hiding executive pension liability that often exceeds regular pensions
* Purchasing life insurance policies on workers with the company as beneficiary
* Excluding low paid workers from 401(k) plans to benefit higher paid executives
For me, the power of the book is how Ellen Schultz pieces together the story of the wholesale looting of fully funded company pensions, while expanding the overall pension liability through unfunded executive pensions. The author pulls no punches, and names names, as she describes how the looting of pensions has taken place and continues to be done at the expense of workers. These actions were not done by the companies acting alone, but with the active support of other companies, and also through complicit politicians through intensive lobbying activities. In the end, the events demonstrate a complete breakdown of ethical behavior, on the part of business leaders, that harms not only the retirees and the current workforce, but the very companies themselves.
I highly recommend the important and must read book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers by Ellen E. Schultz, to anyone concerned with the looting of company pensions from workers, combined with the rise of huge unfunded pensions for the very same executives involved in the worker pension demise. This book will shock and upset many people, but may serve as a wake up call for discovering the decline of ethics in business, and how those same bad ethics are destroying company pensions and the organizations themselves.
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