Nov 25, 2011 ARCHIVES | Entertainment | COLUMNS Ellen E. Schultz
Portfolio
ISBN 978-1591843337
245 pages
$26.95
Reviewed by Kelly Johnson
Hey, Occupy Wall Street. Here's a book to rally around. Looking for a study of the wealth disparity that's sent you to the streets? Ellen E. Schultz offers a guide. "Retirement Heist" is a concise and alarming look at how - in the span of a generation - the 1 percent has looted the futures of the 99 percent.
Schultz wields expertise from years of investigative reporting on the retirement crisis for the Wall Street Journal. Time was, she writes, when pension funds had "such massive surpluses that the companies could have fully paid their current and future retirees' pensions, even if all of them lived to be ninety-nine and the companies never contributed another dime."
With slick accounting tricks, Schultz writes, corporate America has funneled billions of dollars out of pension funds. Many companies used the money to pay for downsizing - covering early-retirement buyouts, which are considered voluntary, instead of imposing a layoff and cash severance. Some funds were simply terminated, and the money was used to offset operating expenses. And so, company by company, a great surplus dwindled.
To replenish the pension funds, companies cut benefits, Schultz writes. Their gains were immediate: Earnings got a boost. The companies' obligations were cut. Their bottom lines were bolstered. It took much longer for workers' losses to register: In many of the cases Schultz cites, workers realized the damage only once they were old and sick and had little in the way of resources to embark on a protracted legal battle.
It's utterly depressing, and that's just the start. Having plundered the pensions, companies exploited 401(k) plans to borrow money cheaply. With pensions underfunded or frozen, they dug into retiree health plans. The trend of tying executive pay to performance only made matters worse, Schultz explains, leading, for instance, to the death-benefit bamboozle, whereby companies take out life insurance policies on their employees. When a worker dies, even if he's long since found other work or retired, the company cashes in on the death benefit, tax-free. In many of these cases, the payout to the company dwarfs whatever benefit might go to the next of kin.
Schultz provides an anatomy of every abomination and shows how it unfolded in individual lives. The aggrieved were engineers and miners, pro football players and pilots. Distressingly, they appeared powerless to stop this bilking or defend themselves against it. If the retirement industry isn't reined in, she concludes, we'll be right back where we were in the 1930s, and "society - and taxpayers - will be paying for services to support the millions of elderly, formerly middle-class Americans."
Kelly Johnson can be reached at johnsonkl(at)washpost.com.
Copyright 2011 Washington Post Writers Group
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