Join getAbstract to access the summary!

Pension Dumping

Join getAbstract to access the summary!

Pension Dumping

The Reasons, the Wreckage, the Stakes for Wall Street

Bloomberg Press,

15 min read
10 take-aways
Audio & text

What's inside?

How and why U.S. companies are dismantling their pension plans and what, if anything, can be done to stop them.

  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×

Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

Fran Hawthorne began writing about pension dumping in the 1980s and her expertise is evident. In this excellent book, she provides clear explanations about why pension dumping exists, why the practice will continue, and how the laws and organizations created to protect workers against pension dumping often abet it instead. You work all your life to put some retirement money together and should be able to count on the promises made to you. However, too many people are finding that those promises were written in disappearing ink. getAbstract recommends reading this book to understand what you are up against, to know what distinguishes defined-benefit plans from defined-contribution plans, and to see why those differences matter. Hawthorne also teaches you why business executives, investors in distressed firms, bankruptcy judges and even union leaders are willing to throw retirees under the proverbial bus to keep companies running. Even if the book is a bit too technical in spots for the average employee who needs to grasp these matters, the subject’s importance should inspire you to embrace and understand the daunting technical terminology of pension legislation and regulation.

Summary

Why Pensions Are Being Dumped

Until the last 20 years of the 20th century, people who worked at major American companies often had the promise of lifetime pensions after decades of loyal work. However, as the U.S. economy changed and some very large companies went through bankruptcy, Americans were shocked to learn that their pensions were not as certain as they had hoped. Major companies, such as Bethlehem Steel, LTV Steel, Polaroid, Kaiser Aluminum and others, could not afford to pay the millions and billions of dollars they had promised to their retirees, so they threw their pension plans overboard. The public outcry about this during the early 1970s spurred Congress to pass the Employment Retirement Income Security Act (Erisa) and to create the Pension Benefit Guaranty Corporation (PBGC). The intention, of course, was to protect workers. But a heavy volume of plan terminations in the 1980s, 1990s and the early 21st century burdened the PGBC. Little relief is in sight: The PBGC created a pension watch list and discovered that the potential future volume of pension dumping could dwarf anything that has already happened.

Wrenching change has come to the automobile...

About the Author

Fran Hawthorne is the author of three previous books and writes on financial issues for The New York Times, Crain’s New York Business and other publications. She first wrote on pension dumping for the publication Institutional Investor in 1983.

Comment on this summary