Raiding Pensions and the PGBC
Executive Summary
- Executives In Favor of Pension Privatization Make Their Case By Raiding Pensions
- What Is The PGBC?
- Neutering Then Infiltrating the PGBC
Introduction
There has been a very large amount of money from elite interests designed to get people to support retirement privatization. This has included:
- Movement from pensions to the 401k
- Republican initiatives to privatize social security
- The raiding of pensions, and thus underfunding of pensions by executives, which serves a dual purpose of enriching executives, but also in promoting the concept that pensions are no longer reliable, and that everyone should move towards the 401k. (as we have discussed also, the 401k is the atom bomb dropped on the concept of retirement.)
Republications use the term “ownership” society a lot to push social security privatization. However, considering that all the people who use this term are wealthy (such as John Snow, who before heading the Treasury received a $33 million payout from CSX and added years of service which he did not spend at CSX), and overpaid for their skill set, and combined with the fact that most of them, like Dick Cheney, have a deep infatuation with torturing people even in cases where there is no intelligence to be gathered, one wonders if perpetual bondage of the “lower classes” is what Bush and his cronies were talking about.
Executives In Favor of Pension Privatization Make Their Case By Raiding Pensions
Many companies have raided their pensions. There is a little problem here because it’s almost impossible for an executive to go to jail, and the potential benefits are enormous. The conservative logic on this is perverse but consistent with their logic that no wealthy person should ever be held accountable for anything, and that only minority groups should spend time in jail. Conservatives are opposed to regulations on raiding pensions, but after they are raided, point people to 401ks, as pensions are not “the future.” They leave out the performance of 401ks or the employer contribution to 401ks. So in addition to wanting to privatize retirement generally, executives like to raid pensions when they have the opportunity.
The way pension raiding works are that the executives wait for an uptick in the market, or release false earnings that they pay Deloitte, PWC, KPMG, Ernst and Young or other accounting firm to sign off. The accounting firm checks nothing but merely agrees that the math as a presented is correct. This is what is called “an audit” by these corrupt firms. (I have worked for several of them, and they will all sign fraudulent accounting statements, as long as you buy their real business, which is consulting services. I was told by several Deloitte Sr. Managers that Enron was really just a media creation and was “no big deal”). Then with the stock price higher, the pension (which is invested in the stock, which should be illegal, but is not), then looks “overfunded.” The executives take care of that problem, but siphoning off cash, and placing into executive compensation, which is then approved by their board of directors, which mainly consists of their golf buddies. The board of directors knows that if they approve this theft than they too will get approval for what they want to do when they ask the executive, who sits on their board of directors at another company, to approve their ridiculous bonus. However, soon the stock price decreased, and now the company is left with an “underfunded pension.” This is an old scam, but it works almost every time because there is no law and no enforcement of pension raiding in the US. Conservatives and to some degree corrupt Democrats are against laws against stealing from pensions because, evidently, it would “reduce the dynamic nature of our economy,” undermine the entire free enterprise system and might be a slippery slope towards socialism, which then would lead to gay rights, and finally communism. We are not sure, but that seems to be the general logic to any standard placed on the wealthy.
Pension regulation brings up the topic of the PBGC.
What Is The PGBC?
The PGBC is the Pension Benefit Guarantee Corporation. Their stated role is to track and keep people apprised as to when pensions were underfunded. However, due to corporate lobbying, this every important list that served the public was eliminated because it held companies too accountable. The quote below is from a Time Magazine article on the theft of pension by the elite.
During those same years, the PBGC, which insures private pension plans, published an annual list of the 50 most underfunded of those plans. In shining a spotlight on those that had fallen behind in their contributions, the agency hoped to prod companies to keep current. Corporations hated the list. They maintained that the PBGC’s methodology did not reflect the true financial condition of their pension plans. After all, as long as the stock market went up–and never down or sideways–the pension plans would be adequately funded. Congress liked that reasoning and, in 1994, reacting to corporate claims that the underfunded list caused needless anxiety among employees, voted to keep the data secret. When the PBGC killed its Top 50 list, David M. Strauss, then the agency’s executive director, explained, “With full implementation of [the 1994 pension law], we now have better tools in place.” PBGC officials were so bullish about those “better tools,” including provisions to levy higher fees on companies ignoring obligations to their employees, they predicted that underfunded pension plans would be a thing of the past. As a story in the Los Angeles Times put it, “PBGC officials said the act nearly guarantees that large underfunded plans will strengthen and the chronic deficits suffered by the pension guaranty organization will be eliminated within 10 years.” Not even close; instead they accelerated at warp speed. In 1994 the deficit in PBGC plans was $31 billion. Today it’s $450 billion, or $600 billion if one includes multi-employer plans of unionized employees who work for more than one business in such industries as construction. – Time Magazine
This is the type of propaganda we are subjected to when government agencies are pressured or captured by corrupt corporate interests.
Neutering Then Infiltrating the PGBC
Thus corporate power has effectively neutered the PGBC which is now too afraid to even publish a list of companies that have raided their pensions. The PGBC is the final line of defense for pensions. If a pension is raided, the obligations fall the PGBC, although they do not pay out 100% of the pension obligation, but just a fraction. However, the PGBC is underfunded, and right before the crash began making speculative investments, which fared very poorly. Clearly, one of the problems is that Bush appointed sleazebags from Wall Street to run the agency. Upon losing the shirt of the PGBC, the previous Bush appointed advisor had this to say.
However, Charles E.F. Millard, the former agency director who implemented the strategy until the Bush administration departed on Jan. 20, dismissed such concerns. Millard, a former managing director of Lehman Brothers, said flatly that “the new investment policy is not riskier than the old one.”
He said the previous strategy of relying mostly on bonds would never garner enough money to eliminate the agency’s deficit. “The prior policy virtually guaranteed that some day a multibillion-dollar bailout would be required from Congress,” Millard said.
He said he believed the new policy – which includes such potentially higher-growth investments as foreign stocks and private real estate – would lessen, but not eliminate, the possibility that a bailout is needed.
Asked whether the strategy was a mistake, given the subsequent declines in stocks and real estate, Millard said, “Ask me in 20 years. The question is whether policymakers will have the fortitude to stick with it.”
Now, they warn about a “perfect storm” scenario in which the agency’s fund plummets in value just as more companies go into bankruptcy and pass their pension responsibilities onto the insurance fund. Many analysts say it is inevitable that the agency will face significantly increased liabilities in coming month – Huffington Post
Who could not trust this statement, as it comes from a former Lehman Brothers executive…..which due to toxic and irresponsible investments no longer exists. Furthermore, its very likely that Charles E.F. Millard was receiving some type of kick-back from these investments. So now, a Bush appointee has further degraded the finances of the government insurance for pensions, which only needs to be there because companies raid their pensions, certainly, when it runs out of money the conservatives can say “look government programs just don’t work.”
References
https://www.time.com/time/magazine/article/0,9171,1122017-8,00.html#ixzz0WHktg5Ql
https://www.huffingtonpost.com/2009/03/30/pension-benefit-guaranty-_n_180804.html