Friday, June 30, 2006

A Pension For Buggery

From the Wall Street Journal:

To help explain its deep slump, General Motors Corp. often cites "legacy costs," including pensions for its giant U.S. work force. In its latest annual report, GM wrote: "Our extensive pension and [post-employment] obligations to retirees are a competitive disadvantage for us." Early this year, GM announced it was ending pensions for 42,000 workers. But there's a twist to the auto maker's pension situation: The pension plans for its rank-and-file U.S. workers are overstuffed with cash, containing about $9 billion more than is needed to meet their
obligations for years to come.

Another of GM's pension programs, however, saddles the company with a liability of $1.4 billion. These pensions are for its executives. This is the pension squeeze companies aren't talking about: Even as many reduce, freeze or eliminate pensions for workers -- complaining of the costs -- their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon.

Companies disclose little about any of this. But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America's pensions.

Even as executives' pensions grow, many companies are curtailing those for the rank and file. In one move, hundreds of employers, including
Boeing Co., Xerox Corp. and Electronic Data Systems Corp., have switched to pension formulas known as "cash balance" plans. One effect is to slow the growth of older workers' pensions or halt it altogether.

Liberals hate corporations. You hear that all the time. Liberals hate corporations and they don't want corporations to do well. Speaking only for myself, I've got nothing against corporations. What I hate is wanton, irresponsible greed.

Corporations should feel free to make as much money as they'd like. But when they've issued promises to employees regarding pensions and future earnings, and then "freeze" or completely eliminate those benefits, I'm outraged and disgusted.

It isn't as if the executives in question are not well-paid. They're very fairly compensated. In some cases, they're so compensated that they throw bacchanalian parties that include hoisting their wives around a vast, pillared room on a bed carried by serfs. That should be hyperbolic, but it's not. That's an Enron party.

If you promise your employees, and they work in expectation of that promise, and you then renege, that's pretty much the definition of a broken contract. Companies should be held responsible for the employment agreements it enters into. Is anyone really of the opinion that business will not exploit its advantages if able? All the more reason to make accountability a priority. What good is a flourishing economy if the workers are broke?


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