November 13, 2013
Americans love catchy phrases and buzzwords, but sometimes such marketing tactics are nothing more than putting lipstick on a pig. That is exactly what corporations are doing when they refer to a new-fangled, risky financial transaction that they have named “pension de-risking.”
This is when companies sell off their retirees’ pension plans to investment funds or insurers, converting what were federally-protested pensions into annuities. This has the impact of stripping defenseless older Americans of legal protections of both the federal ERISA pension law and Pension Benefit Guaranty Corporation. In addition, these annuities become subject to a variety of state laws, dependent upon where the retiree lives.
Last year, General Motors sold off 76,000 retiree pensions to Prudential Insurance, and this year, Verizon sold 41,000 pensions to Prudential. This is not just a GM and Verizon issue. It’s a growing national crisis likely to impact all retirees. In reality, this practice is really pension stripping, a violent act against retirees and the earned pension funds.
America’s retirees need help and real protections on the state level, where insurers are regulated.