Dirty pool with Pension money.

[Plane]

Just over a decade ago, pension plans had a quarter of a trillion dollars in surplus assets. Today, they are collectively underfunded by about 20%. Market losses and historically low interest rates erased a lot of this, but much of the damage was self-inflicted.

http://money.msn.com/mutual-fund/who-killed-private-pensions-wsj.aspx?page=2

With so many ways to tap pension surpluses, companies had an incentive to cut pension benefits even when their plans were overfunded.

Many companies, including AT&T, converted their pensions to so-called cash-balance plans, which slowed the growth of benefits for older workers and, in many cases, froze them altogether for a period of years.

I think on a case by case basis most of these contracts ought to be honored in the terms under which they were first signed.
Exceptions should be exceptional.

[Plane]

Here is a twist I didnt ever hear of before.

Many companies -- especially large banks in the past few year -- have taken out billions of dollars of life insurance on their employees. The policies function as tax-sheltered investment pools that can be used to offset the cost of executive benefits. The companies also collect tax-free death benefits when employees, former employees and retirees die.

[Xavier_Onassis]

Many companies -- especially large banks in the past few year -- have taken out billions of dollars of life insurance on their employees. The policies function as tax-sheltered investment pools that can be used to offset the cost of executive benefits. The companies also collect tax-free death benefits when employees, former employees and retirees die.


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Michael Moore mentions this in Capitalism: a Love Story. It is called "Dead Peasant Insurance".

[Plane]

Does the bank feel hurt if the employees fail to die on schedule?

[Xavier_Onassis]

If a company has hundreds of employees, they will die on a predictable schedule, as shown on actuarial charts. Perhaps they used information from the employees' health care records to separate the short lived from the longer lived. The bank will not feel hurt, since the bank is incapable of telling anything: it is a bank. Companies often took out these policies without the knowledge or consent of the employees or their families, but on a few occasions, the bank contacted the widow or children and that was when the proverbial sh!t hit the fan, and this practice was unmasked.

[Plane]

  According to this article they need your permission to insure you , but they don't have to tell how much they have insured you for.

     The predictability of actuarial tables gets smashed on a regular basis. If we still died on the schedule expected in 1935 Social Security would still have money.

    Plenty.

    One of the flaws that is seen in many American Businesses is a short horizon, what is happening six or ten years in the future seems to be unimportant, and little seed is set aside for recovery from the emergencys that over long time scales are perfectly predictable.