U.S. companies take aim at pension risk with lump-sum offers

By Jilian Mincer – Corporate America is finally ready to deal with a monkey on its back: massive pension obligations.

AT&T Inc on Friday (Oct 19) said it plans to contribute a $9.5 billion stake in its wireless business to its underfunded pension plan. Earlier this week, Verizon Communications Inc moved to unload $7.5 billion in pension obligations to insurer Prudential Financial Inc.

But by far the most common trend in corporate America is to offer lump-sum payouts to thousands of retirees now – these voluntary buyouts could cost companies millions of dollars upfront, but they eliminate the risk of obligations soaring out of control in the future. more> http://tinyurl.com/9dy7gbs

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• Big Money, Big Risks: Should You Take a Lump-Sum Pension Buyout Offer? (dailyfinance.com)
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Jerry Brown Tells Californians They Can ‘Eat High Speed Rail’

By Thomas Del Beccaro – The numbers reveal stark problems for America’s foremost state: 8 of the top 10 worst foreclosure and unemployment areas in the nation, the 3rd highest unemployment rate in the country and underemployment above 20%. California has perennial budget deficits that exceed the size of the overall budgets of more than 20 states. Worse yet, California has unfunded state and local government pension and medical liabilities that are said to exceed $650 billion or over 650% of its income.

How did the World’s onetime 5th largest economy, now 9th, manage to achieve all these dubious “accomplishments”? The same way it allowed its world ranking to slip. The California economy is weighed down by the highest combined tax and regulatory burden in the world – not to mention a massive government sector that is still growing. more> http://tinyurl.com/9mzescu

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• Jerry Brown Tells Californians They Can ‘Eat High Speed Rail’ (forbes.com)
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California’s Brown set for fight over pension reform

By Peter Henderson – California‘s Democratic Governor Jerry Brown heard a clarion call for his party to take on state pensions in the overwhelming passage of retirement reforms by the second and third biggest cities in the state, San Diego and San Jose.

In California, a reliably blue state, the pensions issue is set to trigger a fundamental struggle within the Democratic Party over what needs to be done and how fast – a struggle that could have national implications as some other states have worse pension funding problems. more> http://tinyurl.com/ch64hwm

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Retirement Heist: How Firms Plunder Workers’ Nest Eggs

BOOK REVIEW

Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers, Author: Ellen Schultz

By Steve Denning – Two decades ago, pensions were well funded, due to laws and regulations passed in the 1970s and 1980s. By 2000, pension plans at many large companies had large surpluses that would have covered all current and future retirees’ pensions without them having to contribute anything.

Yet US firms found ways to siphon off billions of dollars in assets from the pension plans. Verizon used assets to finance downsizings. GE sold pension surpluses in restructuring deals, indirectly converting pension assets into cash. Many firms clandestinely cut benefits, using “actuarial sleight of hand to disguise the cuts.” more> http://tinyurl.com/65nhjtc

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• ‘Retirement Heist’: How Firms Trimmed Pensions (npr.org)