Retirement Heist: how companies plunder and profit from the nest eggs of American workers

UNLESS OTHERWISE INDICATED, all financial figures are derived from Securities and Exchange Commission and Internal Revenue Service filings. The pension figures come primarily from the pension footnotes in annual reports (Form 10-K), which include annual data on assets, liabilities, costs, assumptions, and other pertinent figures.

Form 5500, which companies file with the IRS, was the source of some of the liability figures and participant information for qualified (i.e., employee) pension plans.

Executive pensions and deferred-compensation figures and facts come from annual proxy statements (Schedule 14A). Liability figures for deferred compensation at individual companies are extrapolated from deferred tax assets in the 10-Ks and (for banks) from reports filed with the Federal Financial Institutions Examination Council (FFIEC). Liability figures for executive pension liabilities at individual companies come from, or are extrapolated from, pension data in the 10-Ks. Estimates of total executive pay obligations at U.S. companies are derived from Social Security payroll data and were confirmed.

Data for 401(k) plans at individual companies come from Form 11-Ks.

To simplify matters, I have omitted specific citations of pages and dates, but figures for a specific year come from filings made the following calendar year. For example, a figure about GE’s pension obligation in 2009 will be found in the 10-K filed in 2010, just as details about the size of pensions for GE’s top officers in 2010 come from the proxy filed in 2011.

I used Morningstar Document Research (formerly 10-K Wizard) for the securities filings; the IRS 5500s were obtained from the Department of Labor. A free, though somewhat limited, database of 5500s, for both pensions and 401(k) plans, is available at freeerisa.com.

As noted below, other generally nonpublic figures and facts come from court documents.

Unless indicated, comments from individuals are from interviews with the author.

CHAPTER 1: SIPHON

10 “Rigid and irrational legal restrictions”: ERISA Advisory Council, “Report of the Working Group Studying Exploring the Possibility of Using Surplus Pension Assets to Secure Retiree Health Benefits,” November 10, 1999, http://www.dol.gov/ebsa/publications/gulotta.htm.

11 “We believe making excess pension assets”: Ibid.

14 “This restructuring reflects”: PR Newswire, “Verizon Communications Announces Restructuring of Management Retirement Benefits,” news release, December 6, 2005, http://goliath.ecnext.com/coms2/gi_0199-5008432/Verizon-Communications-Announces-Restructuring-of.html.

15 Mark Zellers: “Hardship Testimonies,” gathered by the National Retiree Legislative Network.

16 which are called “420 transfers”: IRS.gov.

16 In the deal, it transferred thirty thousand employees: Ellen E. Schultz, “Raw Deals: Companies Quietly Use Mergers, Spinoffs to Cut Worker Benefits,” The Wall Street Journal, December 27, 2000.

17 GE countersued the U.S. government: Ibid.

18 Don’t put it in writing: “Consulting in Mergers & Acquisitions,” Conference on Consulting Actuaries, annual meeting, Colorado Springs, Colorado, 1996. 19 Royal & Sun Alliance, a global London-based insurer: Gromala v. Royal & Sun Alliance, No. 01-72196 (U.S. Court of Appeals, Sixth Circuit, 2004).

19 got an additional $5,270 a month for life: Ibid.

19 Fruehauf Trailer Corp. used a trickier maneuver: Fruehauf Trailer Corp., Debtor Pension Transfer Corp. v. Beneficiaries Under the Third Amendment to Fruehauf Trailer Corporation Retirement Plan No. 003, No. 05-1374 (U.S. Court of Appeals, Fourth Circuit, 2006).

20 by cutting the benefits of more than 46,000 long-tenured employees: Engers v. AT&T Management Pension Plan, No. C.A. 98-3660 (District of New Jersey, 2005).

20 provided ASA managers with 200 percent to 400 percent: Ibid.

20 more than twice the amount needed to cover the pensions: Ibid.

22 Florida real estate developer: Footnoted.org, March 2, 2011.

23 Occidental Petroleum terminated its pension in 1983: “Non-Traditional Pension Plan Terminations,” Record of the Society of Actuaries, 1983, Vol. 9, No. 4.