Chances are I've already lost the attention of some Cafe readers with that blog title.
But it has become a hot topic with a series of "Wall Street Journal" exposes and a new book titled
Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers. News media such as "USA Today" and "Forbes" are now taking a serious look at the issues author Ellen Schultz has raised.
The basic premise of the exposes and the book is that many large companies are cannibalizing their corporate retirement pension plans under the falsehood that the plans are too costly and under-funded. The typical corporate rational for reducing or eliminating corporate pension plans is that pension plan shortfalls are caused by out-of-control factors such as the large number of retirees, declining stock market investment returns and competition from foreign competitors that eschew good benefits for laborers.
Yet as the author states, far from being a burden, these pension and retiree plans had contributed billions of dollars to company bottom lines over the past decade and a half, and were responsible for a chunk of the earnings that executives had taken credit for. Nor were these retirement programs bleeding the companies of cash. In fact, in the General Electric example at the beginning of the author's book, GE hadn't contributed a cent to the workers' pension plans since 1987 but still had enough money to cover all the current and future retirees.
So who in your organization is watching the store on the true financial impact of corporate pension plans? Has the HR function - which has made a lot of careers out of simply knowing how to interpret, administer and communicate complex plan details - stayed on top of pension plan design alternatives and funding? Or has that been turned over to a Finance function that views pension plans as merely a cost that needs to be minimized?
Now I'm not a person that normally chases after wild conspiracy theories about corporate greed. But I do care that HR professionals have a command of the full impact of compensation and benefits on both an organization's finances and its ability to attract/retain/motivate talent.
Guest blogger Paul Weatherhead is a Pay Program Manager for the US Postal Service. His primary pay program is their award winning Pay-For-Performance program, but he also is involved with other pay and benefit policy issues at the USPS. Paul actively participates in the WorldatWork professional association as an instructor, author, speaker, reviewer, and blogger. In his spare time he teaches human resource management courses for the University of South Carolina. He can be reached at cpaulwd@yahoo.com
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