I’ve been saying for decades that scandal of the first part of the 21st century would be the default of corporate pension plans. I still hold to that prediction and today the Wall Street Journal maps out a particularly infuriating mechanism by which my prediction might very well come to pass:
At a time when scores of companies are freezing pensions for their workers, some are quietly converting their pension plans into resources to finance their executives’ retirement benefits and pay.
In recent years, companies from Intel Corp. to CenturyTel Inc. collectively have moved hundreds of millions of dollars of obligations for executive benefits into rank-and-file pension plans. This lets companies capture tax breaks intended for pensions of regular workers and use them to pay for executives’ supplemental benefits and compensation.
Ah, but have no fear! The PBGC AKA taxpayers will pick up the tab when companies default raising the supreme irony that not only will people without pensions be paying the pensions of people who do but that people without pensions will be paying the pensions of people who do whose pension plans were raided to pay the excessive retirement benefits packages of top management.