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>

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


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

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up to $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate