Meet Chris. He has worked at Caterpillar for almost 40 years as a white collar employee in IT. He is approaching retirement; his traditional pension benefit will be about $1000 per month ($12,000 per year). When he retires, Chris will pay about $560 per month for health insurance benefits for he and his wife, even with Medicare. In 1974, the Caterpillar CEO made $325,000 per year and employees retired with a good pension which included health insurance at no cost. In 2013, the Caterpillar CEO made $12 million per year and he can expect a generous retirement package with almost all benefits paid thanks to Caterpillar; in contrast, employees’ retirement benefits have been cut and health insurance premiums have been increased including paying more for drugs. Chris has other investments that will help him during his retirement, but as he said, “without them I would have to keep working until I die.”
Meet Ruth. She worked at IBM for 17 years. In 2001, IBM eliminated its traditional pension plan and went completely to 401K plans. Employees with a significant amount of time in the traditional pension plan ended up losing a significant part of their retirement savings even after winning a lawsuit against IBM. Employees with less time in the traditional retirement plan received a check for a couple of hundred dollars as a settlement. In 2002, IBM CEO Lou Gerstner retired with a $190 million package, and in 2012, IBM CEO Sam Palmisano retired with $271 million package. Ruth was laid off in 2004 and has no retirement from IBM; work has been hard to come by since then due to the economy. If and when she retires, she will have a meager Social Security check monthly and her savings and insurance from her husband’s death to live on.
Meet Dennis. He retired from Delta Airlines as a pilot. When Delta declared bankruptcy and divested itself from its pension plan in 2005, it turned its pension responsibilities over to Pension Benefit Guaranty Corporation (PBGC). Dennis’ pension went from $1939 per month to $95 per month. In 2012, the Delta Airlines CEO pay package was $8.9 million.