Finance Committee Passes Kerry Plan to Protect Pensions, Hold CEOs Accountable
Today, the Senate Finance Committee agreed to an amendment by Senator John Kerry to hold CEOs and corporate executives accountable for ensuring pension plans are solvent. The Kerry amendment strengthens the link between the funding of deferred executive compensation - benefits for executives that are often valued at millions of dollars a year after their retirements - to the funding of workers' pension plans.
"It's time Washington understood that a worker's pension is just as important as a CEO's golden parachute. The Pension Benefit Guaranty Corporation is there to protect workers when companies go bust, not so companies can break commitments to workers for extra cash-flow in the short term. We've seen what can happen when corporations cook the books, and we need to hold CEOs accountable for actually paying the pensions they've promised their employees," said John Kerry.
Under the Kerry amendment, executives' deferred compensation is restricted if workers' pension plans do not have at least 80 percent of the money to pay out promised benefits.
Several companies' pension programs have been unable to pay promised benefits, in which case the federal government's Pension Benefit Guaranty Corporation has had to step in to pay the promised benefits. In June, the PBGC reported that the average underfunded plan is only 69 percent funded. To complicate matters, the PBGC is currently running a record deficit that tops $20 billion.