Is the "Retirement Crisis" No Accident?
Jan. 12, 2012 — Scottsdale, Ariz. — Is the "Retirement Crisis" No Accident? A new publication indicates “no,” it is not an accident, and could have been prevented. There has been some mention in the WorldatWork online community and was, also, commented on, relative to my most recent blog entry, about a new book out, called Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers, written by Wall Street Journal reporter Ellen Schultz. Here is a the USA Today review of the book, and here are some editorial reviews and customer reviews at Amazon.com.
I have not read the book, but, apparently, she makes an argument that the issue of retirement plan funding has been subject primarily to corporate greed, and she mentions some big named organizations. From what I can gather from reading some of the reviews and the threaded discussions, the book suggests that many organizations turned pension plans into tax shelters and profit centers, taking advantage of tax incentives, various accounting, tax, and other loopholes, unclear regulations, etc., and basically reduced employee pensions while increasing stock prices and increasing executive pensions.
Her research apparently indicates that, while organizations have always positioned underfunded pension plans as the result of factors largely out of their control ( e.g. declining stock market investment returns, large numbers of retirees, foreign competition, aging workforce, escalating costs, etc), in fact, such troubles with these programs really had to do with organizations using them to inflate executive pay and pensions, hide executive pension liabilities, and to finance company downsizings, etc..
The author, also, indicates that, in addition to the organization itself, retirement industry-benefits consultants, insurance companies, and banks all played a big, hidden, role in the decline of U.S. pensions and benefits, resulting in many cases, in the freezing/terminating of defined benefit plans, and overall reduced pension benefits.
According to the author, the disappearance of defined benefit private-sector pension plans didn't have to occur. One WorldatWork member suggests that retirement plan funding is an issue that HR/TR needs to be more knowledgeable about; and there is a need for such professionals to better understand and be involved in the funding and reporting of corporate benefit plans.
What do you think? Has anyone read the book? What is your take on the author’s findings?
The opinions expressed are solely those of the author and do not necessarily represent those of WorldatWork.
|Tue January 17, 2012 10:29 AM||Report Abuse|
Member Since: 5/1/2000
In my three decades of work with two very large organizations, I have seen hundreds of HR people make a full career out of being able to simply communicate complex retirement plan details to thousands of employees. That's fine. There is a need for those people.
But top HR needs to "own" the retirement plans by knowing how they serve to attract, retain and motivate talent; and how retirement plans impact the financial position of the company. Top HR also needs to know alternative design options in order to provide the best value to an organization.
I appreciate you posting this blog on the Retirement Heist. The book is an excellent reminder that none of us truly knows everything there is to know about total rewards. We need to constantly stay on our learning curve to be aware of the issues that the author has raised.
| ||Thu January 12, 2012 5:09 PM (edited 1/13/2012) ||Report Abuse|
Member Since: 4/19/1979
How is this new? Paul Weatherhead, Jack T. and some others have discussed it here http://www.worldatwork.org/waw/community/discussions/discuss.jsp?did=29291 and I recall something called ERISA being passed in way back in 1974 to make it completely impossible for such scams to ever occur again. Ah, but I should never have underestimated the creativity of attorneys and accountants eager to create that result so clearly desired by their paymasters.
If this is such a scandal, where has our society been? Why have none of our benefits specialists and pension gurus been sounding warnings about the unethical if not illegal behaviors? What is the use of a Total Reward professional group that has no idea what is happening in its field?
On the other hand, if this book is simply a typical self-aggrandizing journalistic rant pillorying a tiny handful of individuals for the usual reckless abusers found as outliers in every human endeavor, then it's just a flash in the pan statistical aberration and unworthy of serious note... except to watch to confirm that the offenders get their just deserts (NOT bailed out, as usual).