Calling Michael Moore or Charles Ferguson. America's premier muckraking documentary filmmakers are needed for another expose. This time, they could focus on how companies across this country have cheated millions of their workers out of a secure retirement while enriching executives at the top.
Ellen Schultz set out to explain how it happened in her new book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers. The story is as much one of corporate greed and self-dealing as Ferguson's tour de force on what caused the 2008 meltdown in Inside Job, and Moore's sad-funny tale of craven health insurers in Sicko.
Schultz, a reporter for the Wall Street Journal, describes how corporate executives enlisted benefits consultants, accountants, actuaries and lawyers to exploit every loophole and accounting trick to "monetize" their companies' pension funds and turn them into their own cookie jar.
Schultz begins her saga with General Electric's chief executive, Jeffrey Immelt, who announced at the company's annual shareholder meeting in 2010 that the firm's pension plan was a drag on earnings. New employees would no longer be eligible to participate.
His message was similar to ones trumpeted by hundreds of companies that slashed their pensions and medical benefits for millions of retirees. They all claimed the trouble was an aging work force with retirement packages that were too generous and couldn't be sustained when the stock market faltered.
In fact, as Schultz points out, the plan for GE's workers was in such fine shape that the company hadn't contributed any money into it since 1987, and yet it still had enough money to cover all current and future retirees. The same was true for many large companies. But that didn't stop them from going on a spree of cutting retiree benefits.
The reason, Schultz says, is twofold.
First, cutting benefits replenished pension funds' surplus assets that had been siphoned off for other purposes. For example, GE sold its pension surpluses in restructuring deals. This indirectly turned pension assets into cash. Verizon exploited the surplus to finance downsizing, offering employees sweetened retirement benefits rather than severance, so as not to impact earnings.
Second, cutting benefits helped earnings. Because new accounting rules required companies to put pension obligations on their books, cutting pensions generated paper gains.
This was all the incentive top executives needed. They could trade their workers' comfortable future retirement for a healthier bottom line today that would enhance their personal earnings.
Federal law prohibits employers from rescinding benefits that have been accrued, but employers can suspend the plan's growth by freezing it or providing benefits under a less generous formula. Companies grabbed these options, often changing the way pensions are calculated to disadvantage longtime workers, without disclosing it.
The subterfuge avoided a worker backlash but it also meant a tragic surprise for employees entering retirement — some "cash-balance" plans for older workers effectively froze their pensions just when they should have been reaping the biggest pension enhancements.
Schultz says an industry of benefits consultants arose that helped employers "turn pension plans into profit centers," treating groups of retirees not as deserving of a decent income after giving their working lives to the company, but as portfolios of assets and debts. Pension benefits were squeezed for any additional profits, leaving less for workers.
Today, she says, the giant surpluses are gone, "sold, traded, siphoned, diverted to creditors, used to finance executive pay, parachutes and pensions."
Companies did it to themselves. It was not investment losses, an aging work force and generous union contracts, as they all claim.
In fact, had companies not raided their pension fund assets, "they would have had a cushion that could have withstood even the (recent) market crash," Schultz writes.
Schultz's book is another example of how corporate executive greed is destroying middle-class financial security.
These business titans put America's pensions in crisis to serve themselves. They need to be called out in a documentary, and answer publicly for what they've done.