Security money and Pension Funds may not be. They are being heartlessly milked by an elite who are consumed with selfishness and greed. Do you think that sounds a bit harsh? Well, you be the judge.

Although both the stock market and real estate speculation games are basically gambling, which involves and risks someone else's capital, fleecing the Social Security and Pension Funds is barely distinguishable from outright theft.

Over time, pension funds have a way of increasing in value substantially, and many private companies hold vast sums of worker's pension fund money which they invest, and collect interest on. One reason that pension funds have increased in value so quickly is due to the fact that their investment income is non-taxable.

However, when one company buys up or takes over another company, the resultant merger allows the management of the purchasing company to form a new hybrid company and restructure or reorganize many aspects of both of the original companies to form the new hybrid firm. The problem is that the owners of the hybrid firms are allowed to create a "new" pension fund and in the process, strip off all surplus value that had accumulated over the years. This siphoning off of surpluses is known in the industry as "pension reversions". It's probably a moot point whether the "reversion" refers to the wealth of the pension plan, or to social progress itself. In any event, money that theoretically belonged to the workers, has easily been skimmed off to create instant billions for the hybrid firms' owners. This type of merger leaves in it's wake, a trail of brand new "virtually poor" pension funds.

Even under normal circumstances, when an insured employee dies, a corporation is free to pocket the surplus that has accumulated tax free over the life of the policy. {B84} Here again, value that should have been paid to the policy holder in compensation for the loss of value through inflation gets swiftly pocketed by the corporations.

In the last decade alone, huge corporations like Exxon Corp., United Air Lines, TWA, Union Carbide, and close to 1900 other companies have stripped off about $20 billion in pension fund surpluses. Exxon siphoned off $1.6 billion from its employees' $5.6 billion pension fund. {B85} Currently there is a backlog of over 600 companies waiting for government approval to do exactly the same thing. {B86}

Under current legislation, if a pension plan is closed down prematurely, the new owners are only obliged to pay workers what they have accrued up to that point in time. The normal pension arrangement of "retiring with a percentage of your salary at retirement time" has been robbed from countless workers who had served decades of loyal service.
According to a Federal body called the Pension Benefit Guarantee Corporation which currently underwrites America's pension commitments, over half of the reversions that have taken place have been replaced with either vastly inferior pensions, or else the pension plan has been discontinued entirely!! In 1988 alone, one third of the 230 pension plans which were closed down, were not replaced! {B87}

These pension plan closures always leave their victims stunned because few workers can predict who will be next. The majority of workers do not even anticipate the possibility because the tragedy is seldom if ever given any attention in the media. This media silence is of course not accidental.

Most workers expect to retire with pensions, but very few are aware that no more than 1 in 6 end up collecting them. Too often workers have retired and submitted a claim for pension benefits only to discover that for one reason or another, they have been disqualified from receiving pension benefits by some minor technicality. Many have become victims to commonly occurring events such as changing union locals; temporary interruptions to service caused by an industrial accidents or work shortage layoffs; company bankruptcies; and pension plan terminations.

In fact, the pension problem is so ludicrous that a government official once put it in these words, "In all too many cases the pension promises shrink to this:

"If you remain in good health and stay with the same company until you are sixty-five, and if the company is still in business, and if your department has not been abolished, and if you haven't been laid off for too long a period, and if there's enough money in the fund, and if that money has been prudently managed, you will get a pension!"

What protection does the Federal government provide for workers' private corporate pension funds?
For starters, the government is by its actions encouraging corporations to eliminate private pensions plans! The $1.6 trillion dollars of pension funds still theoretically insured by the Federal government's Pension Benefit Guarantee Corporation, is being reduced at an alarming rate by pension plan terminations. Incidentally, the term "theoretically insured" was used because the PBGC is already carrying on in the red, with a deficit of $1.5 billion! {B88}

Mr Charles Bowsher, the comptroller-general at the government's General Accounting Office (GAO) estimates (probably quite conservatively) that losses in the private pension fund area alone may amount to from $100 billion - $150 billion! {B89} Even if PBGC were not running in the red, it would not help those folks whose companies closed down their pension plans and paid out their employees with annuities. First of all, annuities are not by nature indexed to inflation, but worst of all, the PBGC does not provide insurance for annuities. If an insurance firm responsible for the management of the annuities goes bankrupt, and there are plenty of likely candidates, pensioners would be left completely out in the cold!

Perhaps you are confident that the Federal government's Social Security system will come to your rescue?
Well, there is ominous news even there. As with private pension schemes, tax-free interest generated from the invested pension payroll deductions generates substantial surpluses each year. The surplus for 1989, which should be used to index the social security to inflation, amounted to about $56 billion dollars. Although this trust fund is theoretically "off-budget", the Treasury not only counts the "surplus" as "on budget" for the purposes of Gramm-Rudman jiggery-pokery, but spends the surplus and hands back to the social security trust fund some Treasury securities (i.e.IOUs) which don't increase the nation's acknowledged budget deficit, even though when it comes time to pay the money out to pensioners there will be IOUs and not money. {B90} As recently as May 1989, the House Rules Committee rejected a resolution submitted by Marty Russo (D-Ill) to correct this very deceit. {B91}

Will there be pension money left for the retiring baby boomers 10-15 years from now?
Probably not, if the bottom 90% continue to allow the economic elite to milk the economy dry. Pension funds will have been literally skimmed off or terminated to make countless millions for existing multimillionaires (and of course billionaires). Keep in mind too, that much of the pension fund money held by corporations on behalf of their employees is invested with banks. Also be aware that this pension money is precisely the money that was extracted by the elite through their "debt for equity" swaps.

Have we been fleeced in any other major way?
Sure. The travesties to economic justice previously discussed have merely been the ones which seemed most relevant. There are many others. We will however look at one more. Monetary devaluation.

Monetary Devaluation

I hope the following explanation will shed some light on this seldom discussed but extremely important topic. To do this we must start with a discussion of how and why bits of paper used as currency have come to be valued for more than their intrinsic paper value.

Let's start out by saying that everything has a trading value. Since ancient times, people have traded their labor and possessions for other people's labor and possessions. Cars, ball-point pens, even old shoes, you name it, practically any object can be taken anywhere else on the planet and exchanged for something that the other trader considers to be of equivalent value. Most things have an obvious value due to their usefulness, like tools, furniture, real estate, watches, or tractors. Other objects, like paintings can be valued almost entirely for their beauty. Gold bars on the other hand are neither functional nor beautiful in the strictest sense of the terms.

But because gold has always been looked upon as a precious commodity by practically every social community on the planet, it has been used as a trading medium for millennia. In fact the longest lived form of tradable and transportable wealth has been gold in the form of coins. Unlike livestock and other perishable goods, gold has an intrinsic value because it does not decay or corrode, and because it has always been a somewhat scarce commodity. Over time, gold became a symbol for permanent value. Gold coins "became money" simply because the gold that formed the coins was valued practically everywhere. Not surprisingly, gold became popular as a means of transferring large sums of wealth from one country to another.

In fact, until relatively recently, the value of all coins was based on the intrinsic value of the precious metals from which they were made. In other words, coppers had the value of the copper from which they were made, nickels were worth the value of the nickel they were made of, and dimes, quarters, and dollars for the silver. Theoretically the quarter should have weighed two and a half times as much as the dime, and a silver dollar should have weighed four times as much as a silver quarter. Because pure gold is a relatively soft metal, people used to bite their gold coins to see that they were not counterfeits. Slowly but surely, people came to trust coins as a form of tradable wealth because the governments guaranteed that coins had a real value based on the value of the precious metal they were made of.

Now, what about paper money?
Paper money supposedly had value because the governments (those in power, the elite) gave their guarantee that at any time the paper could be converted into real wealth. Citizens could exchange a dollar bill into coins which supposedly contained real wealth in

{B84} "A price on your head" Forbes (Sep 4 1989): p80
{B85} "The power of the pension funds" BusinessWeek (Nov 6 1989): p154
{B86} "The fury over pension funds" BusinessWeek (Jul 3 1989): p31
{B87} "The power of the pension funds" BusinessWeek (Nov 6 1989): p155
{B88} "Hidden bombs" The Economist (Oct 7 1989): p26
{B89} "Unsheltered" The Economist (Jan 6 1990): p32
{B90} "The folly of raiding the piggy bank" The Economist (Apr 8 1989): p27
{B91} "Capital Comment" Financial World (Jun 27 1989): p112