Unions are working people’s anti-theft device, so goes the bumper sticker. In a new book entitled, Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers, award-winning journalist Ellen Schultz has written an indispensable account of the organized kleptomania confronting workers’ pensions in contemporary corporate America.
Schultz, one of the Wall Street Journal’s investigative reporters “put on earth so that they and the Wall Street Journal editorial writers would cancel each other out,” provides a richly-detailed and deeply-informed account of the systematic looting of pension plan assets that frequently passes for pension fund management in the corporate world. With the connivance of pension regulation, income tax law, actuaries and the pension consultant industry, companies have been able to turn their pension plans into cash cows pumping up share prices and executive compensation. Schultz's account reveals how firms have managed to monetize pension surpluses to convert pension fund assets into corporate earnings, while a relentless assault on pension benefits for employees and retirees -- in good times and bad -- has subsidized the ballooning costs of executive pensions.
Schultz offers a service not just in documenting how firms are managing workplace pensions for their own short-term interests rather than plan members. She also adds another chapter to the story of how inequality was able to grow so dramatically in the last 30 years. We already have numerous accounts of how financial engineering and corporate restructuring devastated workers and communities while richly rewarding executives (most recently Jeff Madrick's dramatis personae entitled Age of Greed). Schultz's book focuses on the particular part played by corporate pension funds in this sordid history.
While she describes the US, Schultz writes that “the retirement industry has exported its tactics, using them to achieve similar outcomes in retirement plans in Canada” and elsewhere. We need a similar exposé for this country. Until then, the book is instructive at a number of levels and well worth a read.