Chrysler employees were hit with devastating news in the late 2000s.
The auto manufacturer filed for bankruptcy in 2009 — meaning it was no longer obligated to pay employees who invested in a supplemental executive retirement plan.
100 million dollars of pensions were lost, casting the perfect storm for a lawsuit.
The program that provided executives with a vehicle “for life” was also cancelled. Employees were forced to either return or pay for their vehicles.
The lawsuit
450 former Chrysler executives sued Chrysler’s former owners, Daimler AG and Cerberus Capital Management, for axing the value of their supplemental pension benefits.
Among them was Chysler’s former chief executive, Lee Iacocca, who became renowned for rescuing the company from collapse in 1979.
The former employees sued DaimlerChrysler and Cerberus, who took ownership of Chrysler in 2007. Cerberus managed the automaker up until its bankruptcy.
Lessons learned from Chrysler employees
Between work, family and commitments, it’s easy to focus on life at hand and not what’s to come decades ahead. This is especially so if you’re relying on a pension plan.
Chrysler’s bankruptcy shows that employer pension plans are not always reliable, regardless of a company’s current prosperity. And that “guaranteed, life-long” benefits are not set in stone.
However, you can control your future with effective retirement planning. Having a personal plan protects you from the shortcomings of employer-based plans.
Financial advisors offer in-depth knowledge and insight into building a retirement plan that is sustainable and solid.
Expert support can prevent confusion, uncertainty and misguided decisions in creating your retirement roadmap.
Ultimately, the federal bankruptcy judge over the Chrysler lawsuit rejected appeals to restore the lost benefits.
The guaranteed pensions were a private benefit, meaning they were not protected by the Pension Benefit Guaranty Corp. run by the US federal government.
While pension plans can instill a sense of safety in your future, they are not infallible.
Implementing an independent retirement plan can protect you and your loved ones from the emotional and financial devastation of a failed pension program.
If you are seeking support in building your retirement, please feel welcome to contact us.
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