Reuters Money
“Retirement Heist” book asks: Who stole America’s pensions?
Can we afford retirement in this country? Not if you believe politicians who claim entitlement spending is out of control and that the economy is being dragged down by our aging population.
I don’t buy it. Soaring healthcare spending is a critical problem, but not only because our population is aging. And Social Security is affordable as a percent of GDP — it’s equal to 4.7 percent of GDP this year, and will slowly rise to 5.3 percent by 2021, according to the Congressional Budget Office.
Now comes an important new book that debunks another retirement myth: Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers (Portfolio/Penguin). Written by Ellen E. Schultz, an award-winning investigative reporter for The Wall Street Journal, the book takes on the often-heard claim that private employers no longer can afford to provide traditional defined benefit pensions.
Schultz’s thesis is that the near disappearance of defined benefit pension plans in the private sector didn’t have to happen at all.
“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.”
The result has been a severe decline in private sector defined benefit (DB) coverage.
The percentage of Fortune 1000 companies with at least one frozen DB plan (where the sponsor company retains the plan but stops future accruals for all or some workers) more than quadrupled between 2004 and 2010.
What we are witnessing here is the emergence of a new parasitic corporate aristocracy that doesn’t give a crap about the rank and file workers who make their lives possible. I’m reminded of a movie I saw once where a noble on horseback is exiting his castle and he passes an old woman selling eggs from a wicker basket. This noble greedily reaches down from his mount and snatches some of the eggs without paying for them. What corporate America has been doing to this country since the 90′s in the name of their executives is no less blatant thievery than the scene I have described here. The boardrooms of these corporations have become little more than non-government taxing authorities. America has forgotten that corporations exist so people can have jobs and raise families not the other way around. If something doesn’t change soon we will be living in a new Age of Robber Barrons . These executives expect people to work for nothing and that’s exactly what we’ll end up doing unless the people of this country pick up their proverbial torches and pitchforks and let the nobles in the castle know that we won’t take anymore of their BS.