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Book Review: "Retirement Heist"

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February 05, 2014 – Comments (1)

Board: Macro Economics

Author: PosFCF

I don't know where I got the recommendation to read this book: a bibliography of another of the many books I've been reading over the last couple of years; possibly a poster here at the Fool, I just don't remember.

That being said, I'm 50 pages into the book and have been absolutely astounded at what is being disclosed by this authoress. She is a former journalist for the Wall Street Journal and, so far in the first 50 pages of the book, has named so many companies and at least three different mechanisms they have used to take money out of pension plans, reduce contributions, or both. She has named many large US corporations and, in some cases, the CEOs who approved the new plans.

I had some idea, from reading financial statements and the assumptions that were (to me) outrageously optimistic, that the plans were under-funded....but I had no idea to what lengths pension fund robbing has gone.

The book title is: "Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers" by Ellen E. Schultz.

I have linked the Amazon listing because it has a number of editorial reviews that are, as far as I could tell from what I've read of the book so far, are understated.
http://www.amazon.com/Retirement-Heist-Companies-Plunder-Ame...

I believe this could be a very macroeconomic issue as boomers discover that what they thought their retirement income would be is going to be significantly different (lower) than what they will be receiving.

I haven't seen much discussion of this topic on this board over the last few years, so maybe it might be of interest to some. She is a good writer and the pace of the book moves right along. Easy to read, hard to digest the ramifications....and Amazon has several (at least) that are very inexpensive to buy.

Poz 

1 Comments – Post Your Own

#1) On February 12, 2014 at 3:37 PM, griderX (97.30) wrote:

Intresting....talk about the biggest PONZI scheme going...that would be the PBGC!

http://www.pbgc.gov/res/reports/ar2013.html

PBGC is funded by assets from trusteed plans and premiums from plan sponsors, not by taxpayer dollars. Unfortunately, our premiums are set in law. They’re both too inflexible — so that some plans are unfairly paying for the risks of others — and too low to cover PBGC’s benefit guarantee levels.

In 2003, the Government Accountability Office added PBGC to its “High Risk” list of agencies, because we control neither the benefits we pay nor the premiums we charge. Congress has repeatedly raised PBGC’s premiums, but they remain too low to fund our obligations. That’s why, 10 years later, we remain on GAO’s High Risk List.

 

Although PBGC has a net financial deficit, PBGC still has very substantial assets, and the day when we run out of money is years away. We now project that, absent changes, our multiemployer program will be insolvent within 10-15 years. PBGC's projections are consistent with projections made by actuaries of large troubled plans. That date is being moved up by changes in pensions and the room for maneuvering is shrinking every year. Administrations of both parties have proposed putting PBGC finances on the same basis as other government insurance programs and private insurance, by making PBGC’s Board responsible for setting premiums.

Without the tools to set its financial house in order, PBGC may face for the first time the need for taxpayer funds. That’s a situation no one wants.

The last statement is scary if tax payers have to bail out the PBGC you will see a firestorm of fury!

 

 

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