In the last decade, the country’s biggest companies have raided worker benefits for profit. An expert explains how
By Thomas Rogers
September 17, 2011
America is in the midst of a retirement crisis. Over the last decade, we’ve witnessed the wholesale gutting of pension and retiree healthcare in this country. Hundreds of companies have slashed and burned their way through their employees’ benefits, leaving former workers either on Social Security or destitute — and taxpayers with a huge burden that, as the baby boomer generation edges towards retirement, is likely to grow. It’s a problem that is already affecting over a million people — and the most shocking part is, none of this needed to happen.
As Ellen E. Schultz, an investigative reporter for the Wall Street Journal, reveals in her new book, “Retirement Heist,” it wasn’t the dire economy that led these companies to plunder their own employees’ earnings, it was greed. Over the last decade, some of the biggest companies — including Bank of America, IBM, General Motors, GE and even the NFL — found loopholes, abused ambiguous regulations and used litigation to turn their employees’ hard-earned retirement funds into profits, and in some cases, executive compensation. Schultz’s book offers a relentlessly infuriating look at the mechanisms they used to get away with it.
We spoke to Schultz over the phone about the companies’ deliberate deceptions — and what they mean for the future of the country.
How did you first discover this “retirement heist” was happening?
In the late ’90s I noticed that many companies, including a lot of the largest companies in the country, were hiring experts to change their pension plans. They all claimed they were doing it to make themselves more modern and better for the mobile workforce, but it struck me as unlikely that a lot of companies would be doing something that was apparently costing them money just to make employees happy. I ultimately figured out that they had found a way to use the accounting rules to profit from cutting benefits.