General Electric (GE), once a symbol of American industrial might, has now become a textbook example of corporate greed and irresponsibility.
In its latest scandal, GE transferred $1.7 billion in pension obligations to Athene Annuity and Life Co., a private equity-controlled insurer notorious for risky investment practices.
This decision has jeopardized the retirement security of over 70,000 retirees, exposing them to significant financial risks while stripping them of vital protections under the Employee Retirement Income Security Act (ERISA).
Let’s dissect this case to understand how GE’s actions epitomize the dangers of neoliberal capitalism, corporate corruption, and the prioritization of shareholder profits over public welfare.
The Pension Risk Transfer
In December 2020, GE announced the transfer of a substantial portion of its pension obligations to Athene, a subsidiary of Apollo Global Management.
This move was framed as a strategic decision to reduce GE’s financial liabilities. However, beneath the corporate jargon lies a cold truth: GE prioritized cost savings over the well-being of its retirees.
Why Athene Is a Risky Choice
Athene is no traditional insurer. Unlike established players such as New York Life, Athene employs high-risk investment strategies that prioritize short-term gains over long-term stability. Its portfolio is heavily weighted toward lower-quality, higher-risk assets like leveraged loans and asset-backed securities.
Moreover, much of Athene’s liabilities are reinsured through opaque offshore entities in Bermuda, where regulatory oversight is minimal. This “Bermuda Triangle Strategy” allows Athene to obscure its true financial health while exposing retirees to heightened risks.
Athene’s surplus-to-liability ratio—a critical measure of an insurer’s ability to meet its obligations—stands at a meager 1.44%, far below the industry average of 7% and dwarfed by New York Life’s 12.24%.
This thin margin leaves little room for error, making it more likely that retirees could face reduced or delayed payments in the event of financial turbulence.
The Loss of ERISA Protections
One of the most egregious consequences of this transaction is the loss of ERISA protections for affected retirees. Under ERISA, pensions are backed by stringent fiduciary standards and the Pension Benefit Guaranty Corporation (PBGC), which acts as a safety net in case a plan sponsor becomes insolvent. By transferring its obligations to Athene, GE effectively severed these safeguards.
Instead, retirees are now reliant on state guaranty associations (SGAs), which offer significantly weaker protections.
Most states cap coverage at $250,000 in present value—an amount that could be exhausted within a few years for many retirees. Worse still, some states impose additional limitations; for example, California applies a “haircut” that reduces benefits by 20%. This patchwork system is ill-equipped to handle large-scale insolvencies, leaving retirees vulnerable to financial ruin.
GE’s Breach of Fiduciary Duty
Under ERISA, plan fiduciaries are required to act solely in the interest of participants and beneficiaries with the “care, skill, prudence, and diligence” that a prudent person would exercise. GE’s decision to select Athene as its annuity provider blatantly violates these principles.
Failure to Select the Safest Annuity
ERISA mandates that fiduciaries must obtain “the safest annuity available” when transferring pension obligations. Yet GE chose Athene—a provider with a documented history of risky practices—over more stable alternatives. This decision appears driven not by what was best for retirees but by what was cheapest for GE.
A Pattern of Neglect
GE’s pension mismanagement did not begin with this transaction. The company has a long history of underfunding its pension plan, which had a staggering $31 billion deficit as recently as 2016—the largest among S&P 500 companies at the time. Instead of addressing this shortfall responsibly, GE froze its pension plan in 2019 and later resorted to lump-sum buyouts that undervalued retirees’ benefits.
The Role of Private Equity
Athene’s parent company, Apollo Global Management, exemplifies the predatory nature of private equity in today’s economy. Private equity firms prioritize maximizing returns for their investors—often at the expense of workers and retirees.
The Executive Life Parallel
Athene’s practices bear an unsettling resemblance to those of Executive Life Insurance Company, which collapsed in 1991 after overloading its portfolio with junk bonds. Executive Life’s failure left hundreds of thousands of policyholders with drastically reduced benefits—a cautionary tale that underscores the risks associated with private equity-backed insurers.
Conflicts of Interest
Apollo profits handsomely from managing Athene’s assets through high fees and risky investments. These conflicts of interest create perverse incentives that prioritize Apollo’s bottom line over retirees’ financial security. Alarmingly, Apollo has faced regulatory scrutiny for similar practices in other pension risk transfer deals.
Economic Fallout
The economic fallout from GE’s actions extends far beyond balance sheets—it impacts real people who dedicated their lives to building the company.
Financial Insecurity for Retirees
For many retirees, their pension is their primary source of income. By transferring these obligations to Athene, GE has introduced significant uncertainty into their lives. The risk of reduced or delayed payments could force retirees to deplete their savings prematurely or even face poverty in their later years.
Erosion of Trust
GE’s betrayal erodes trust not only among its current and former employees but also within the broader community. When iconic corporations like GE abandon their commitments to workers, it sends a chilling message about the fragility of retirement security in America.
Neoliberal Capitalism at Work
GE’s pension scandal is not an isolated incident—it is symptomatic of a broader trend under neoliberal capitalism where corporations prioritize shareholder profits above all else.
The Cost-Externalization Playbook
By offloading its pension obligations onto Athene, GE effectively externalized its risks onto retirees while reaping immediate financial benefits. This mirrors other corporate strategies like outsourcing labor or cutting environmental corners—all aimed at minimizing costs regardless of societal consequences.
Regulatory Gaps
This case also highlights glaring gaps in regulatory oversight. The fact that private equity-backed insurers like Athene can operate with such high levels of risk underscores the need for stricter regulations to protect vulnerable populations like retirees.
Calls for Accountability and Reform
To prevent similar abuses in the future, several steps must be taken:
- Stronger Fiduciary Standards: ERISA should be amended to explicitly prohibit transfers to insurers with subpar financial metrics.
- Enhanced Oversight: Regulators must scrutinize private equity-backed insurers more rigorously and close loopholes that allow them to exploit offshore jurisdictions.
- Corporate Accountability: Companies like GE must face meaningful penalties for breaching fiduciary duties—not just fines but also requirements to restore lost benefits.
- Public Awareness: Grassroots movements and consumer advocacy groups must continue shining a spotlight on corporate misconduct to hold companies accountable.
Unfortunately, it is incredibly hard for a corporation to be successfully sued by its employees over general fuckery going on with the retirement plans. Deloitte recently won a landmark case in this field, and as far as I can tell, no class action has ever successfully won a case against their employer for breach of fiduciary duty.
A Cautionary Tale
By prioritizing short-term cost savings over long-term responsibility, GE has placed tens of thousands of retirees at risk while enriching itself and its private equity partners. Maybe General Electric’s executives were yearning to return to the time in which they were the most valuable corporation in the entire world… who knows!
This case should galvanize policymakers, regulators, and activists alike to demand greater accountability from corporations and stronger protections for workers and retirees.
After all, if we allow companies like GE to shirk their responsibilities without consequence, who will be next?
sauces:
[1] https://evilcorporations.org/category/labor-exploitation/
[2] The attached PDF, silly
[3] https://sloanreview.mit.edu/article/did-jack-welch-blow-up-the-business-world
[4] https://evilcorporations.org/deloitte-employees-tried-to-fight-back-and-got-steamrolled-by-corporate-greed-again/
[5] https://www.evilcorporations.org
