Pension Dumping: The Reasons, the Wreckage, the Stakes for Wall Street


Fran Hawthorne, author of Pension Dumping, is a recipientof the New York State Society of Certified Public Accountants awardfor Excellence in Financial Journalism for 2009—the firstyear books have been honored.

Pension plans in America no longer represent commitments thatfinancially troubled companies will honor. Neither bankruptcycourts, nor Washington, nor unions have the clout to make them doso. The disposition of these plans is instead ...

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Fran Hawthorne, author of Pension Dumping, is a recipientof the New York State Society of Certified Public Accountants awardfor Excellence in Financial Journalism for 2009—the firstyear books have been honored.

Pension plans in America no longer represent commitments thatfinancially troubled companies will honor. Neither bankruptcycourts, nor Washington, nor unions have the clout to make them doso. The disposition of these plans is instead left to serve theneeds of big investors. Often these investors are a failingcompany’s best hope of restructuring after bankruptcy.Investors want a lean investment unburdened with financial promisesto employees no longer on the payroll. Despite laws passed todiscourage the termination of plans, the courts allow it, caving into the forces garnered to reinvigorate a failing company. Unionsare often compelled to choose between the financial welfare ofretirees and jobs for active workers.

Pension Dumping explains in shocking detail howterminating the pension plan became a knee-jerk strategy forbankrupt companies that hope to attract big investors to help themreorganize.

Hawthorne traces the dynamics and the players involved as a pensionis targeted for termination:

  • thebankruptcy court and the hierarchy of power that dictateswhose interests will prevail 
  • the choices forced on unions
  • the burden placed on the Pension Benefit GuarantyCorporation
  • the risks investors take and the returns they look for
  • the companies’ efforts to salvage what they can as theyrestructure, as well as the backlash they risk by breaking pensionpromises

 In 2008, Pension Dumping was cited in testimony beforea Congressional committee investigating bankruptcies in relation topensions.

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What People Are Saying

From the Publisher
"Will retirement security be an oxymoron for most Americans? FranHawthorne's Pension Dumping offers a clear-eyed, provocativelook at the critically important world of pensions."
—Barbara Rudolph
Author, Disconnected
International Editor, The Deal

"Having lived through the S&L crisis, I can't help but wonderwhat policy makers might have done had they been presented with aconcise, cogent description of the gathering of the perfect stormbefore events unfolded. Fran Hawthorne has written such a book forpension policy makers. Let’s hope they take heed."
—Olena Berg Lacy
Assistant Secretary of Labor for the Pension and Welfare BenefitsAdministration, 1993–1998

"With clarity and even humor at times, Hawthorne examines acomplicated, multifaceted, and often troubling phenomenon withbroad current and future implications for companies, workers,retirees, taxpayers, and society as a whole. It is a cautionarytale well worth reading."
—Phyllis C. Borzi
Counsel for Employee Benefits, U.S. House ofRepresentatives, Committee on Education and Labor,1979–1995

"Fran Hawthorne provides a thought-provoking and lively analysis ofbankruptcy laws, specialized investment and capital marketstrategies, and where pensions fit into the strategies to movetroubled companies forward. She discusses how the bankruptcy lawsfocus on the business in the future and how these laws ignore therights of employees. She also suggests areas for policychange."
—Anna M. Rappaport, F.S.A., M.A.A.A.
Anna Rappaport Consulting
Past President of the Society of Actuaries

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Product Details

  • ISBN-13: 9781576602393
  • Publisher: Wiley
  • Publication date: 4/2/2008
  • Series: Bloomberg Series, #10
  • Edition number: 1
  • Pages: 288
  • Sales rank: 1,202,139
  • Product dimensions: 6.30 (w) x 9.48 (h) x 0.89 (d)

Meet the Author

Fran Hawthorne has been covering the pension industry formore than twenty years, mainly as a senior editor and senior writerat Fortune and Institutional Investor magazines. Sheanalyzed the first version of pension-dumping scams in a December1983 cover story for Institutional Investor.

Hawthorne is the author of Inside the FDA: The Business andPolitics Behind the Drugs We Take and the Food We Eat (Wiley,2005) and The Merck Druggernaut: The Inside Story of aPharmaceutical Giant (Wiley, 2003). Her articles on a range offinancial and other topics appear regularly in The New YorkTimes, Worth, Self, Newsday, Crain’s New York Business,and other publications.

Visit Fran Hawthorne's Pension Dumping blog.

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Table of Contents


Part 1: The Reasons.

Chapter 1: The Dispensable Pension Plan.

Chapter 2: Last in Line: The Retiree.

Chapter 3: Pension-Free and Ready to Compete—Or Not?

Part 2: The Laws.

Chapter 4: Writing the Rules.

Chapter 5: Failure’s Fallout: LTV and OtherPrecedents.

Chapter 6: The Bankruptcy Court Minuet.

Part 3: The Investors.

Chapter 7: How Investors Play the Game.

Chapter 8: The Signs of Failure.

Chapter 9: Pensionless Restructuring.

Chapter 10: The Emergence of US Airways.

Chapter 11: The Reemergence of US Airways.

Part 4: The Future.

Chapter 12: The Problem Continues.

Chapter 13: The Next to Fail.

Chapter 14: The Politics.

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Sort by: Showing 1 Customer Reviews
  • Posted May 12, 2009

    more from this reviewer

    Solid overview of the U.S.'s pension problems

    Fran Hawthorne began writing about pension dumping in the 1980s and her expertise is evident. In this excellent book, she provides clear explanations about why pension dumping exists, why the practice will continue, and how the laws and organizations created to protect workers against pension dumping often abet it instead. You work all your life to put some retirement money together and should be able to count on the promises made to you. However, too many people are finding that those promises were written in disappearing ink. getAbstract recommends reading this book to understand what you are up against, to know what distinguishes defined-benefit plans from defined-contribution plans, and to see why those differences matter. Hawthorne also teaches you why business executives, investors in distressed firms, bankruptcy judges and even union leaders are willing to throw retirees under the proverbial bus to keep companies running. Even if the book is a bit too technical in spots for the average employee who needs to grasp these matters, the subject's importance should inspire you to embrace and understand the daunting technical terminology of pension legislation and regulation.

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