CEO’s Who Can’t Manage Their Companies’ Retirement Plans Want to “Fix” Social Security

Members of the Fix the Debt coalition ring the bell at the New York Stock Exchange<a href="http://www.fixthedebt.org/">Fix the Debt</a>

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Corporate chief executives who get involved in politics often invoke their business bona fides as a superior guide to fixing the nation’s problems. The CEO’s behind the latest “Fix the Debt” campaign are no exception. The top dogs at more than 90 American corporations—ranging from Honeywell’s David Cote to Loews’ James Tisch— have signed on to the coalition to press Congress to rein in federal spending, particularly on entitlements, and to balance the nation’s books. The anti-debt coalition would like to see big cuts in Social Security benefits and an increase in the retirement age as a “fix” for the program.

Of course, American political leaders should always take the advice of rich businessmen with a grain of salt (and here they are almost uniformly men), especially when the remedy also includes big corporate tax cuts, as the “Fix the Debt” coalition is advocating for. But also, in this case, it’s fairly clear that there’s nothing about being a CEO that makes one especially well-equipped to dictate massive changes to the nation’s collective retirement plan. Indeed, the CEO’s behind the “Fix the Debt” coalition come from companies with rather dismal records of managing their own retirement plans.

Consider this: According to a new report from the Institute of Policy Studies, the 71 publicly held firms in the coalition have “a combined deficit of more than $100 billion in their employee pension funds.” As with Social Security, these companies’ retirement plans don’t have enough money in them to pay out the promised benefits to the company workers. That’s not because the companies don’t (or didn’t) have the cash. On the contrary.

One of the largest companies participating in the “Fix the Debt” campaign is GE, which in the 1980s had a $24 billion pension fund surplus. But GE and other big companies like it found ways to siphon money out of the fund to use for other things, like restructuring deals. GE also failed to contribute any money to the fund for 24 years. By 2009, GE’s pension fund had a $22 billion deficit. Rather than draw on some of its cash reserves—some $85 billion currently on hand—GE last year decided to simply close the fund to new participants, forcing them into the sub-par 401(K) system.

Meanwhile, GE’s CEO, Jeffery Immelt, hasn’t skimped on his own retirement funds. He has a pension worth more than $47 million, plus another $5.3 million in deferred compensation coming his way, a nest egg that would translate into a monthly pension payment of about $292,000 for the rest of his retired life, according to IPS. By way of comparison, the average monthly Social Security check is $1,237.

IPS also includes in its report some staggering statistics about the state of the private sector’s retirement planning that suggest some of these companies’ retirement policies are one reason American workers are so reliant on the very safety net that the “Fix the Debt”ers want to slash. Here are a few:

  • Percentage of Fortune 100 firms offering traditional pensions to employees in 1980: 89
  • Percentage of Fortune 100 firms offering traditional pension for employees in 2012: 11
  • Percentage of Fortune 100 firms operating such plans for CEO and other executives: 79
  • Percentage of private sector workers having traditional pension at work in 1980: 83%
  • Percentage of private sector workers having traditional pension at work in 2011: 15%
  • Percentage of current full-time American workers in their 50s that have neither 401(K) nor traditional retirement plan at work: 44%
  • Percentage of Americans with no retirement assets of any kind: 34%
  • Estimated amount of retirement savings necessary (beyond Social Security) to provide $25,000 in annual income during retirement years: $500,000

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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