The most disturbing news to come out of the collapse of the late publisher Robert Maxwell's business empire is that he looted up to $1.4 billion from pension funds of his British companies.
To Americans already worried about pensions--and understandably frightened after the disasters in S&Ls and junk bonds--the immediate question is: Could Maxwell have done that here?
The answer, basically, is no. That's not to say there are no worries in U.S. pension funds, but an American corporate chieftain could not simply transfer pension assets from a public company to one of his private holdings, as Maxwell did.
U.S. regulation under the Employee Retirement Income Security Act of 1974 (ERISA), which is tougher than British law, requires that an outside trustee--not connected with the company or employees--approve all transactions. No U.S. trustee would have allowed Maxwell's transfers, which clearly suggest conflict of interest.
Also, the Pension and Welfare Benefits Administration of the U.S. Labor Department would have demanded constant disclosure and explanation from Maxwell of how pension fund investments benefited his employee plan participants.
That's one reason why U.S. pension authorities have found the funds of Maxwell's U.S. companies--the New York Daily News, MacMillan publishing and others--adequately financed and free of irregularities.
Still, the fact that the U.S. system thwarted Maxwell won't stop many U.S. employees from worrying. Pension money is too important.
First, the monthly private or state employee pension will pay more than Social Security for most of the 55 million covered employees.
Second, the U.S. pension system represents an enormous amount of money--almost $3 trillion in public and private funds--invested in stocks, bonds and real estate. The fear is that such a honey pot will prove too tempting for corporate manipulators or state and local politicians looking for ways to balance budgets.
Some of those fears are overblown, and some may be well founded. But if U.S. employees understand what's going on, chances are that the pension system--one of the financial glories of the post-World War II era--will come through all right.
Right now the pension funds of 85,000 companies governed by ERISA are more secure than public employee funds, which are threatened by politicians desperate for cash in a time of tight budgets.
