Thursday, August 7, 2008

CORPORATE EXECS ABUSING PENSION PLANS FOR OWN BENEFIT

Wall Street Journal - At a time when scores of companies are freezing pensions for their workers, some are quietly converting their pension plans into resources to finance their executives' retirement benefits and pay.

In recent years, companies from Intel Corp. to CenturyTel Inc. collectively have moved hundreds of millions of dollars of obligations for executive benefits into rank-and-file pension plans. This lets companies capture tax breaks intended for pensions of regular workers and use them to pay for executives' supplemental benefits and compensation.

The practice has drawn scant notice. A close examination by The Wall Street Journal shows how it works and reveals that the maneuver, besides being a dubious use of tax law, risks harming regular workers. It can drain assets from pension plans and make them more likely to fail. Now, with the current bear market in stocks weakening many pension plans, this practice could put more in jeopardy.

How many is impossible to tell. Neither the Internal Revenue Service nor other agencies track this maneuver. Employers generally reveal little about it. Some benefits consultants have warned them not to, in order to forestall a backlash by regulators and lower-level workers.

1 Comments:

At August 7, 2008 2:10 PM, Anonymous Anonymous said...

Ted Kennedy is Chairman of the Senate Health, Education, Labor and Pensions Committee. Has been for years, decades I guess. You can try to contact him to see if he might someday hold hearings on pension problems, which is his responsibility, but I wouldn't hold your breath. He's the son of a multi-millionaire and doesn't really understand what it means to have to pay your bills.

 

Post a Comment

<< Home