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

ISBN: 978-0-470-88514-7
288 pages
May 2010
Pension Dumping: The Reasons, the Wreckage, the Stakes for Wall Street (0470885149) cover image


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

Pension plans in America no longer represent commitments that financially troubled companies will honor.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

Pension Dumping explains in shocking detail how terminating the pension plan became a knee-jerk strategy for bankrupt companies that hope to attract big investors to help them reorganize.

Hawthorne traces the dynamics and the players involved as a pension is targeted for termination:
  • thebankruptcy court and the hierarchy of power that dictates whose interests will prevail 
  • the choices forced on unions
  • the burden placed on the Pension Benefit Guaranty Corporation
  • the risks investors take and the returns they look for
  • the companies’ efforts to salvage what they can as they restructure, as well as the backlash they risk by breaking pension promises

 In 2008, Pension Dumping was cited in testimony before a Congressional committee investigating bankruptcies in relation to pensions.

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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 Other Precedents.

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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Author Information

Fran Hawthorne has been covering the pension industry for more than twenty years, mainly as a senior editor and senior writer at Fortune and Institutional Investor magazines. She analyzed the first version of pension-dumping scams in a December 1983 cover story for Institutional Investor.

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

Visit Fran Hawthorne's Pension Dumping blog.
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"Will retirement security be an oxymoron for most Americans? Fran Hawthorne's Pension Dumping offers a clear-eyed, provocative look 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 wonder what policy makers might have done had they been presented with a concise, cogent description of the gathering of the perfect storm before events unfolded. Fran Hawthorne has written such a book for pension policy makers. Let’s hope they take heed."
—Olena Berg Lacy
Assistant Secretary of Labor for the Pension and Welfare Benefits Administration, 1993–1998

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

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