“CHAPTER 1

Siphon: HOW COMPANIES PLUNDER
THE PENSION PIGGY BANKS

IN NOVEMBER 1999, a group of the nation’s leading pension experts met at the Labor Department in Washington to discuss a $250 billion problem. After eight years of double-digit returns, the pension plans at American corporations had more than a quarter of a trillion dollars in excess assets. Not a shortage of assets—excess assets. At some companies, the surpluses had reached almost laughable levels: $25 billion at GE, $24 billion at Verizon, $20 billion at AT&T, $7 billion at IBM.
One might expect that such lush asset balances would be something to celebrate.
Pension assets had been building for years, the result of downsizings, a robust stock market, laws enacted in 1974 that required employers to adequately fund pensions, and a 1990 law that made it harder for them to raid the surplus by terminating their pensions.
Thanks to this, many employers hadn’t contributed a cent to their plans since the 1980s, yet they still had enough money to cover the pensions of all current and future retirees even if they lived to be one hundred. With so much money, the plans would cost the companies nothing for years to come.
But employers weren’t celebrating. The money was burning a hole in their pockets. In theory, surplus pension assets are supposed to remain in the pension plans, to provide cushion for the inevitable times when investment returns are weak and interest rates fall. But employers felt that requiring companies to use pension money only to pay pensions made no sense.”

Excerpt From: Ellen E. Schultz. “Retirement Heist.” Portfolio/Penguin, 2011-09-15. iBooks.
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