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250 Billion Reasons for Retirees to Worry

By Thomas Steed and Edward S. Stone, Esq

For workers of a certain age, it was typical to remain employed at a single company for decades or an entire career. That type of loyalty was highly respected and while the old cliché of being awarded a gold watch for decades of service comes to mind, the true prize for workers was the ironclad guarantee of retirement security in old age.

The defined benefit pension –once considered the norm for older Americans – has been hobbled by financial maneuvers that have hollowed out the core of what those benefits were meant to provide.

Immediate corrective action from Congress is needed to head off a retirement income security train wreck coming down the tracks for millions of seniors who are worried sick.

In just the past decade, American companies have outsourced over $250 billion of retirees’ pension assets to insurance annuity firms and other private equity investors, with little to no safety net for retirees, should this highwire gamble not work out well.

This corporate financial trend, officially called De-risking, was so hot in 2021, that over $40 billion of retiree assets were transferred from the security of a pension plan to the unknown of a group pension annuity. In 2022, according to the non-profit Retirees for Justice, there’s been $21 billion in liabilities transferred as of September 30, 2022, and the year is not even over yet.

Shouldn’t there have been a headline somewhere, given that massive – quarter trillion – chunk of someone’s retirement money trading hands?

Unlike the requirements of a pension plan, group pension annuities leave the millions who rely on those assets in the dark, as there is zero transparency about who is doing what with our retirement money. Are our retirement funds hidden away in the Cayman Islands, or some bank in Russia? Or perhaps they are invested in a business venture of which only Bernie Madoff would approve.

De-risking occurs when major corporations offload or transfer their retiree pensions, replaced instead by a group annuity contract. Unlike a pension, these annuities are not federally protected under the Employee Retirement Income Security Act of 1974 (ERISA), nor are their investments transparent.

Recent federal legislation, the Pension Risk Transfer Accountability Act of 2021 (H.R.5877) by Representative Frank Mrvan (D-IN) and Senator Chris Murphy (D-CT), would avert this crisis and strengthen ERISA. The Rise and Shine Act (S. 4353) is another pivotal piece of federal legislation that could help this growing problem.

In 2012, 41,000 fellow Verizon retirees had their pensions converted without any warning or recourse. That was our wake-up call. Around the same time, more than 75,000 General Motors retirees faced the same dismal news.

Who can guarantee us that those same pension assets won’t be subsequently transferred, again and again? Or that the next investment manager will act prudently and in the best interest of retirees?

We all get older and hope that a dignified retirement awaits as we enter the final stage of our lives. Being forced to suddenly fight for retirement security now, deep into our golden years, is simply immoral.

Tens of millions of our fellow retirees already provided time and labor to ex-employers, over decades-long careers, that we can’t take back—and those employers shouldn’t be able to take back what they had offered and promised in exchange. No one at this age should need to worry about pension thieves leaving us destitute at this fragile time of life.

America’s retirees need to get behind a movement to secure our retirement.

Thomas Steed is Chairman of the non-profit Association of BellTel Retirees, which fights for the rights of tens of thousands of retirees from Verizon, AT&T, Frontier, Lucent and other communications companies that evolved from the former Bell System. He is retired from Verizon, served with the Communications Workers of America.

Edward S. Stone, Esq. is founder and executive director of the nonprofit retiree advocacy group Retirees for Justice, headquartered in Greenwich, CT.

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