Ellen Schultz - Retirement Heist

health care and

pension assets and

pension funding and

and subsidies for prescription drug benefits

Taylor, Bill

Taylor, Rhada

Teledyne

Tibbs, Don

Tillerson, Rex

Tillman, Felipe M.

Torrie, William

Towers Perrin

pension cutting and

on retiree health plans

Towers Watson

Travelers Insurance Co.

TRW

Ugoretz, Mark

Union Club

unions

dissolving retiree benefits and

excess pension assets and

lawsuits against retired members of

retiree health plans and

Unisys

United Airlines

United Auto Workers

United Parcel Service (UPS)

United Steelworkers of America

Unite Here

Upper Big Branch Mine disaster

US Airways

U.S. Court of Federal Claims

USX–U.S. Steel Group

Valero Energy Corp.

Van Dyke, John

Varity Corporation:

dissolving retiree benefits and

lawsuits and

Project Sunshine of

Verizon Communications

excess pension plan assets of

health care and

Vine, John

Wachovia Corp.

Waldron, Denis

Walker, Lorenzo

Wall Street Journal, The

Wal-Mart

Walt Disney

Washington, Victor

Watson Wyatt Worldwide

on lump-sum payouts

Waxman, Henry

Webster, Mike

Wellman, Jill

Wells Fargo

Western Electric

Lucent and

Whirlpool

Williams, Delvin

Winn-Dixie Stores

workers’ compensation

World Trade Center

Wotus, Stanley

W.R. Grace

Wyeth

Xerox

Yarter, Chuck

Zellers, Mark

This court handles disputes between contractors and the government.

The question of who owns the surplus assets has provoked numerous lawsuits, but the cases have by and large been resolved in employers’ favor. One of the most significant was Hughes Aircraft Co. v. Jacobson (1999), in which the Supreme Court ruled that employers can use surplus assets even if employees contributed to the plan.

Creditors challenged the payments in bankruptcy court, which halted the payouts to the executives. The case dragged on for years, and in 2005 the bankruptcy court ruled that the pension payments “constituted a fraudulent transfer,” and said the pension money should have gone to pay the creditors.

When later asked to comment about this piece of advice, a spokesman for Watson Wyatt maintained that Brown was actually advocating clear communication to plan participants. “The term ‘magic words’ was a lawyer’s reference to the triggering words in the [disclosure] statute,” he said.

A number of companies “grandfathered” older workers under the prior plan. But these transition periods typically lasted only five years, merely postponing, and ultimately increasing, the wear-away.

Employers began using unisex mortality tables in the 1980s, which has been disadvantageous for women taking lump sums rather than annuities.

In recent years, some employers have argued that their workers are actually dying younger; this would enable employers to contribute less to their pension plans. Lawmakers bought it: The Pension Protection Act of 2006 allows large companies to use their own mortality assumptions when they figure out how much money to contribute to pension plans. Lower life spans mean lower contributions.

The rules, developed by the Financial Accounting Standards Board (FASB), went into effect for large companies in 1987 and a bit later for small employers.

In 2003, the Securities and Exchange Commission began investigating whether companies were using retiree plans to manage earnings. It sent subpoenas to Boeing, Delphi, Ford Motor, General Motors, Navistar International, and Northwest Airlines, asking the companies whether they had used pension and health-benefit funds to adjust their earnings in recent years. The companies said “Of course not,” and the investigation fizzled out. The SEC was focusing on discount rates and other assumptions used to calculate liabilities, not the use of pension cuts and other maneuvers.

This explains why COBRA costs can be so high: Employers can segregate former employees—regardless of their age—into the retirees’ risk pool.

An executive’s ability to delay paying payroll taxes on compensation is in itself an economic benefit that ultimately boosts executive paychecks. And at some companies, they don’t pay payroll taxes at all: The companies reimburse them for their FICA payments.

Of course, Aon also provided group and executive policies benefiting the victims’ families, which it purchased from other insurers. To be clear, Aon and other companies aren’t celebrating when they receive death benefits; they’re taking out the policies to benefit from the ability to shelter investments in them from taxes, and for the accounting benefits.

When companies move deferred-compensation obligations into pension plans, taxpayers not only end up subsidizing additional tax breaks on executive pay, but they also eventually end up on the hook in another way: When deferred executive salaries and bonuses are part of a pension plan, they can be rolled over into an IRA—another taxadvantaged vehicle.

To help the plan pass the discrimination tests, the company added a minimum benefit of $400 to $500 a year for eligible retirees. “The Company’s pension plan passes the test by a wide enough margin to permit the transfer of most of the supplemental retirement benefits to the Pension Plan,” noted an internal company memo.

Eli Gottesdiener, referring to the PricewaterhouseCooper’s plan in court documents.

Convicted in 2007, Black was freed on bail in 2010 while part of his case was on appeal. In June 2011, a federal judge ordered him back to prison for thirteen months.

Less fortunate were the retirees who ended up at auto-parts maker Hayes Lemmerz. To dump the retirees, the company initially explored the idea of suing them in court and asking a judge to agree that an earlier settlement McClow had negotiated, in which the company had agreed to provide a certain level of lifetime coverage, was ambiguous. The company filed for Chapter 11 in 2009 and shed most of its retiree obligation. When it emerged from bankruptcy, it was obliged to pay only $1,000 a year per post-sixty-five retiree.

The football disability benefit increased to $5,585 in December 1994, $6,835 in April 1997, and $7,667 in April 2000.

Employees of religious organizations are also exempt from ERISA.

Only about half of former pro players are eligible for coverage under the plan, because they had fewer than three credited seasons, which is the minimum required.

These are called “leveraged” ESOPs, to distinguish them from ESOPs used by owners of small, privately held companies to buy out the owners’ shares.