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Old 08-04-2008, 08:56 AM
 
34,990 posts, read 36,178,448 times
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Little-Known Move Uses Tax Break Meant For Rank and File

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.
...
How many [pension plans may be jeopardized] is impossible to tell. Neither the Internal Revenue Service nor other agencies track[s] this maneuver. Employers generally reveal little about it. Some benefits consultants have warned them not to, in order to forestall a backlash by regulators and lower-level workers.

Companies Tap Pension Plans To Fund Executive Benefits - WSJ.com
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Old 08-04-2008, 09:27 AM
 
Location: Raleigh, NC
9,043 posts, read 12,031,945 times
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Quote:
Originally Posted by delusianne View Post
Little-Known Move Uses Tax Break Meant For Rank and File

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.
...
How many [pension plans may be jeopardized] is impossible to tell. Neither the Internal Revenue Service nor other agencies track[s] this maneuver. Employers generally reveal little about it. Some benefits consultants have warned them not to, in order to forestall a backlash by regulators and lower-level workers.

Companies Tap Pension Plans To Fund Executive Benefits - WSJ.com
This is why I don't invest in US companies anymore. Haven't in a long time.

Low dividend yields with hot/cold (suspending or retaining) as opposed to fine tuning the dividend amount, and the shareholders are just pawns on a Ponzi scheme involving company buybacks after the shares depreciate in value, screwing over the stockholder.

Executives in the US are paid entirely too much, yet sheeple investors don't mind crappy/zero dividends to fund their golden parachutes.
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Old 08-04-2008, 09:42 AM
 
2,840 posts, read 3,238,839 times
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What else are pension plans for if not a piggy bank for corporate executives?
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Old 08-04-2008, 09:50 AM
 
Location: San Antonio
10,238 posts, read 19,703,918 times
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This why union controlled pensions such as the Boilermakers and Ironworkers have is good. The pension already has the funds, which come from many employers, and there's no way for the employers to get them back. Plus there are now Federal watchdogs who keep their eyes on union pensions like a hawk.

The Boilermakers even give pension raises when the fund is doing particularly well.
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Old 08-04-2008, 03:06 PM
 
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"Beautiful dreamer, . . . "
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Old 08-07-2008, 08:08 AM
 
Location: Londonderry, NH
41,478 posts, read 54,290,784 times
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Of course they will. Can't let the money be wasted on the little people. After all once you are done with them why keep paying? This makes good, if dishonest, business sense.
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Old 08-07-2008, 08:41 AM
 
59,322 posts, read 46,365,380 times
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If I am reading this correctly, they aren't taking the pension money to pay executive compensation but rather including the executive stuff in the pension plans in order to take advantage of taxation laws.

Basically, this isn't a screw the little guy with a pension move but rather a tax loophole they are trying to exploit....which is up to the IRS to nip if it isn't legal or for congress etc. to pass laws to close the loophole if that is the case.

If I am missing something, could someone post a good description of how this is hurting John Q. Pensioner? (Please, something intelligent and factual as I'm trying to learn and not general ranting)
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Old 08-07-2008, 10:41 AM
 
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That is the way I read it too. Nothing taken from the fund really.
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Old 08-07-2008, 01:39 PM
 
Location: Londonderry, NH
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Nothing taken if enough was put into the fund to pay for the executive's retirement. It takes a LOT of fund to pay for a couple of million a year for a retiree.
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Old 08-07-2008, 02:34 PM
 
59,322 posts, read 46,365,380 times
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Quote:
Originally Posted by GregW View Post
Nothing taken if enough was put into the fund to pay for the executive's retirement. It takes a LOT of fund to pay for a couple of million a year for a retiree.
Ironically, since the CEO gets his retirement paid from the same fund as the worker bee....I might actually LIKE this because if the fund is short it's his pocket getting hit too. There are rules and calculations made involving pension plan funding.

I still prefer defined cash balance pension plans and 401k's but something like this is better than nothing.

Still seems like a tax move though.
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