Companies Tap Pension Plans To Fund Executive Benefits

Wall Street Journal online ^ | 8-04-08 | ELLEN E. SCHULTZ and THEO FRANCIS

[Renfield]

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....

[Kimberly GG]

I’m sure some freeper will be along soon to explain why this is just fine and dandy.

[rabscuttle385]

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.

That's okay, McCain will bail them out.

[Wolfie]

It might be. If the big wigs’ pensions are going down the tubes right along with the rank and file, somebody in Washington might actually give a crap.

[Slapshot68]

“I’m sure some freeper will be along soon to explain why this is just fine and dandy.”

Yeah, I can’t fathom any justification for this. This is really slimy.

[mojito]

This kind of “creative accounting” should be illegal. The article details how Intel uses the practice to gain tax benefits intended for rank-and-file workers to compensate highly paid executives whose benefits confer no tax advantages to the company.

This seems to be a violation of the spirit, if not the letter, of the Tax Code.

Further, a publicly-traded company like Intel is probably under obligation to disclose these practices to investors. And I bet they aren’t.

[The KG9 Kid]

I doubt it. The Freepers who regard corporations as divine usually ignore these 'corporations caught red-handed doing something slimy' threads. This thread never happened.

If anything, one of them may be brave enough to come in here and say that the facts in the article are suspect, wildly out of context, misinterpreted, something that everyone already does anyway and therefore isn't news, an outright lie perpetrated by the liberal media agenda, or wishful thinking on behalf of the journalist who wrote the piece.

[LaurenD]

“I’m sure some freeper will be along soon to explain why this is just fine and dandy.”

And to accuse anybody who dares to criticize it of being a socialist, democrat, marxists, liberal, troll, etc.

Doesn’t matter how conservative one might be on just about everything else, if they don’t toe the line 100% in favor of big business, they are parroting democrat talking points according to some on here. Every time it I see it, I realize who it is that is really parroting what their handlers tell them to say for the sake of their own wallets. They don’t put what is best for America first.

[Zathras]

I don't know why they targeted Intel but we don't do it.
The pension (its not called that) and 401k plan are managed by an outside firm.

[steve-b]

This is the sort of thing that builds public support for socialism.

[Paleo Conservative]

This kind of “creative accounting” should be illegal.

The way to get rid of it is to get rid of defined benefit pensions and switch to defined contribution pensions. Of course union bosses wouldn't like that, because it would be harder for them to skim off the top.

[mojito]

Companies that would use their employee-benefits fund as a kind of slush fund to avoid taxes on executive compensation are not doing their employees or their investors any favors.

If my portfolio had a lot of Intel stock I’d be pretty annoyed at the company.

[taxcontrol]

Understand that the title is misleading. If a company has an employee pension plan, and it is fully funded, and then decides to move or fold the executive pension plan into the employee plan, they have to move the funding for the executive plan over as well. As long as the plan remains fully funded, the consolidation reduces costs for the company with no impact to the employees.

Further, there is a LONG TERM incentive created for the executives to keep the pension plan fully funded. For if they do not fund the pension plan with the attached executive pensions, then they are only hurting their own retirement.

[JackDanielsOldNo7]

Remember the rule of "big business is never wrong" FReepers

1) Corporations are always right

2) If you think they are wrong refer to rule #1

[moonhawk]

I can’t comment on the right or wrong of this issue—it sounds shady to me, but I’m far from well versed—but the “spirit” of the tax code is to make it so confusing that anyone anywhere at anytime can be found to be in violation of it for political expedience, personal spite, or whatever.

Therefore, anytime anyone can manipulate the “letter” of the tax code to his/her/their advantage is OK by me unless you are screwing somone else in the process.

IOW, the spirit of the tax code is to manipulate the letter.

If the workers are losing benefits, then this is clearly wrong. If the companies are merely saving on taxes, more power to them. Lowers the cost of doing business, and the price of goods and sevices.

[jim_trent]

I believe everyone is asking for you over in this thread.

[Brian S. Fitzgerald]

Without rich folk, who would have jobs to give to poor folk? /sarc

[wideawake]

Not only have I not been mentioned, taxcontrol posted the only informed comment so far, in post 13.

Without the tax code, this would not even be an issue.

[mojito]

Generally, I agree with you. The tax code is a many-headed beast, and good accountants and tax attorneys are expensive for a reason.

But this is a situation were things are getting too close to outright tax fraud for my comfort.

[jim_trent]

> “Not only have I not been mentioned,...”

I thought the people on posts #2, #8, and #14 were asking for you. You are the first person I thought of when I read those.