Retirement Heist: how companies plunder and profit from the nest eggs of American workers

44 Finlay was exactly the kind of employee: Ellen E. Schultz, “Pension Cuts 101: Companies Find Host of Subtle Ways to Pare Retirement Payouts,” The Wall Street Journal, July 27, 2000.

47 “it masks a lot of the changes”: William Torrie, PricewaterhouseCoopers, “Plan Design Issues: The Corporate Perspective,” New York Annual Meeting, Society of Actuaries, Vol. 24, No. 3, New York, October 1998.

47–48 “If you decide your plan’s too rich”: Norman Clausen, principal, Kwasha Lipton, Society of Actuaries meeting, Colorado Springs, June 1996.

48 Single Payment Optimizer Tool (SPOT): Watson Wyatt client material.

49 “Choosey Employees Choose Lump Sums!”: Watson Wyatt Insider newsletter, 1998.

49 lump sums . . . shift longevity risk: Author’s analysis. The Social Security Administration has details about life expectancy at http://www.ssa.gov/history/lifeexpect.html; the Wharton School has a life expectancy calculator at http://gosset.wharton.upenn.edu/mortality/perl/CalcForm.html.

50 General Motors, for instance, doesn’t allow: Theo Francis, “Pension Tension: Figuring Out When to Lump It,” Wall Street Journal, March 15, 2007.

50 about one-third of blue-collar workers: Bureau of Labor Statistics, 2010.

50 The Marine Engineers’ Beneficial Association: Theo Francis, “Pension Tension.”

51 Mary Fletcher, a marketing services trainer: Author interview.

52 During oral arguments before the Supreme Court: Amara v. Cigna, November 30, 2010.

CHAPTER 3 : PROFIT CENTER

55 Their primary tools included the new accounting rules: Financial Accounting Standards Board, “Employers’ Accounting for Pensions,” Statement of Financial Accounting Standards No. 87, 1985.

57 “You could have real economic wealth transfers”: Julia D’Souza, John Jacob, and Barbara Lougee, “Why Do Firms Convert to Cash Balance Pension Plans? An Empirical Investigation,” American Accounting Association, Annual Meeting, 2003.

58 companies with the most pension income: Ellen E. Schultz, “Joy of Overfunding: Companies Reap a Gain of Fat Pension Plans,” The Wall Street Journal, June 15, 1999.

58 Patricia McConnell, a senior managing director at Bear Stearns: Robert McGough and Ellen E. Schultz, “How Pension Surpluses Lift Profits,” The Wall Street Journal, September 20, 1999.

60 Researchers at Harvard: Daniel Bergstresser, Mihir Desai, and Joshua Rauh, “Earnings Manipulation, Pension Assumptions and Managerial Investment Decisions,” Quarterly Journal of Economics, February 2006.

62 The panelists put on a skit: “Consulting in Mergers & Acquisitions” panel, Conference on Consulting Actuaries, Colorado Springs, 1996.

63 Warren Buffett, chairman of Berkshire Hathaway: Warren E. Buffet, “Who Really Cooks the Books?” editorial, The New York Times, July 24, 2002.

CHAPTER 4 : HEALTH SCARE

65 “Health care costs continue to skyrocket”: John McDonnell, CEO, McDonnell Douglas, letter to retirees, October 7, 1992.

67 A sample from late 1991: “Automakers Face Massive Charges,” Associated Press, November 12, 1991; “Rude Awakening on Health Costs,” The Los Angeles Times, November 13, 1991; Lee Burton and R. J. Brennan, “New Medical-Benefits Accounting Rules Seen Wounding Profits, Hurting Shares,” The Wall Street Journal, April 22, 1992.

67 “The Street views FAS 106 obligations”: Ethan Kra, then the chief retirement actuary at William M. Mercer, “Basics of Funding Retiree Medical,” Proceedings of the Conference of Consulting Actuaries, 1996.

68 McDonnell Douglas’s pump-and-dump maneuver: Company filings; Ellen E. Schultz, “This Won’t Hurt: Companies Transform Retiree-Medical Plans into Source of Profits,” The Wall Street Journal, October 25, 2000.

69 “they created a piggy bank of earnings improvers”: Jack Ciesielski, “Why SFAS Is Not a Dead Issue,” Vol. 3, No. 3, The Analyst’s Accounting Observer, March 23, 1994.