Friday, October 21, 2011

Plundered Pensions

In case you haven’t seen it yet, the author of a new book is making the rounds (The Daily Show, Morning Edition, etc.) selling her new book -- Retirement Heist. It’s going on my “to read” list. (I’m still wading through Shelby Foote’s The Civil War: A Narrative.)

This author -- Ellen Schultz -- used to work for the Wall Street Journal. I’d suggest taking a look at this article from Reuturs:

“Retirement Heist” book asks: Who stole America’s pensions?

”“It wasn’t an accident,” Schultz says in an interview. “It is the result of actions companies took starting in the 1990s to profit from their plans. Employers took perfectly healthy plans with a quarter trillion dollars in aggregate surpluses, and they siphoned out the money through a variety of means.””

And/or this article from Forbes:

Has Your Retirement Been Stolen?

”To be sure, the Employee Retirement Income Safety Act of 1974 made clear that pension assets are to be managed solely for the benefit of participants. But Schultz describes how companies still managed to use the money to pay for severance packages and for parachute payments to executives, among other things. Some companies simply sold pension assets for cash. Now pensions are collectively 20% underfunded.

Many employees are already aware of how this pension-starving affects them. In the book, Schultz writes about how a Delta pilot who’d been receiving a pension of almost $2,000 a month, which fell to just $95 a month after the company went bankrupt.”

You need to keep going in this article. On page two...

”FORBES: What about government employees, or teachers, cops and firemen?

SCHULTZ: There’s been a bit of hysteria over the public plans. For the most part, the benefits aren’t as rich as they’ve been characterized. Most are fairly realistic, and the numbers sometimes look larger than they really are because they include automatic forced retirement savings, for example. The bottom line is that, with some well-publicized exceptions, a lot of these plans aren’t as generous people think they are and aren’t as underfunded as people think they are.”

On page three...

”SCHULTZ: Well, you’ll probably have to continue working longer. You’ll have to save more, which will be difficult. ... Really the only safety blanket that you have is Social Security, which is also under assault. The same retirement industry that dismantled pensions would love to dismantle that program and have a crack at the assets.”

Why yes, I did tell you so. More than once.

Don Brown
October 21, 2011

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