Mar 8, 2012
By Bill Freeda
Bill Freeda is president of the Media Sector Retired Members' Council.
"Retirement Heist" is a new book by Ellen Schultz, a former investigative reporter for the Wall Street Journal. She carefully describes how companies plunder and wring profits from the defined benefit pension plans of American workers. It's required reading for union leaders engaged in bargaining with the country's biggest corporations.
Schultz reveals how companies siphon billions of dollars from their employees' pension plans, not to benefit retirees, but to use these funds to hide the growing liabilities of their executive pension plans. At some companies, executive plan liabilities far exceed those of the regular employee pension plans. These Supplementary Executive Pension Plans, SERPs, are not supported by a pension trust, and are available only to a select few of a company's executives.
Ms. Schultz also details how corporations purchase billions of dollars of life insurance on their workers, and use the policies as informal executive pension funds, collecting tax-free death benefits when insured workers and retirees die, all without the knowledge or consent of the employees or their families.
Several CWA employers are discussed in the book, with whole sections devoted to GE and Lucent.
Two of the more infuriating statements come from Victor Rice, CEO of Varity. Although his company's pension fund was overfunded, and the cost of retiree healthcare was low, Rice still wanted to cut retiree benefits. A company memo entitled "Philosophies & Objectives" stated, "the Company is not committed to maintenance of a retiree's standard of living." When Rice finally found a "legal" way to make retiree medical coverage disappear overnight, he bragged that he had "loaded all his losers in one wagon." I suggest that when reading this book, you do so fortified with a glass of wine, a martini, or as in my case, with a fist full of blood pressure medication.
Our challenge now is to find a way to put a stop to this egregious behavior. Legislation is a long shot at this time, and even if new laws were passed, clever consultants would probably find loopholes, just as they have found ways around other federal pension legislation. Nevertheless, everyone interested in ensuring that employees and retirees are treated with fairness, respect and dignity must work diligently to find creative ways to expose the disgraceful practices revealed in "Retirement Heist."
Freeda is president of the Media Sector Retired Members' Council.