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Join your fellow employees who are fighting for your benefits - Join the Alliance!

Retirees, Vendors, Contractors, Temps, and Active Employees are all eligible to become members of the Alliance.


    Highlights for week ending January 4, 2003
  • IBM Canada retirees take action. IBM Canada retirees have grouped together to take action against IBM's broken promises. They would like to launch a class action lawsuit and are looking for supporters. They have a web site at http://members.rogers.com/comjust/


  • From "ibmmike2006": "As we approach the end of the year, I think it appropriate to let you know how much stock options the Executives of IBM partook. Here again, stock options are just a perk, like SERP, and EDCP that regular employees do not enjoy." ... "To figure Lou's net, on 5/16/2001, exercised stock option price of $15.24 to $18.66 a share (750,000 shares) and sold the same day for $114.00 to $114.07 the same (750,000 shares). Do the math. How does this compare to his $1,000,000 million a month salary?" Read more, including where to go to see what former CEO Lou Gerstner and other IBM executives received from exercising stock options.


  • Forbes: The Richest Americans; Our 20th annual ranking of the 400 richest Americans.


  • Annex Bulletin: Gerstner: The Untold Story. How IBM Chairman Flunked “Globalism 101” in 1993, “Civility 201” in 1995/1996, While Passing “Obsequiousness 301” in 1994. Excerpt:"Those who have read Lou Gerstner’s new book, Who Says Elephants Can’t Dance, have a pretty good idea about what the former IBM chairman thinks of himself. Those who are interested in learning what kind of a man he really was/is, should read on."


  • FastCompany: Are All Consultants Corrupt? That's one possible conclusion in the wake of the Enron scandal. According to David Maister, who's been studying professional-services firms for more than 20 years, it's time to clear the air. Excerpt: "Enron's monumental bankruptcy, Global Crossing's questionable accounting practices, and Wall Street's complicity - if there is a common thread in the scandals of the day, it is the central role played by the nation's elite professional-services firms. McKinsey & Co., the bluest of blue-chip consulting firms, gave Enron its strategy -- and even its former CEO. Jeffrey Skilling's model for Enron was to pattern it after a professional-services firm, to elevate the company above the lesser status of an energy company to the more rarified air of a knowledge-based, asset-light company. Andersen, among the most respected accounting firms, vouched for Enron's books. Enron was chock-full of MBAs and refugees from accounting and consulting firms."


  • Bloomberg News: Billions in earnings don't exist. Pension-fund 'time bomb' is detonating on companies' profits. Excerpts: "'There's a serious illness pervading a portion of the financial market,' says Kathleen Connell, California controller and a board member of the state's two largest pension funds: the California State Teachers' Retirement System and the California Public Employees' Retirement System. She says accounting rules are allowing companies to artificially increase stock prices. 'Phantom pension earnings are portrayed as income,' she says. 'It's a ticking time bomb.'"


  • CFO Magazine: Funding Fun House. Critics say current accounting lets companies distort the picture they present of pension plan performance. Excerpts: "After years of getting a bottom-line boost from pension gains, companies are now experiencing pension losses, which show up in a variety of forms, including hits to earnings, cash flow, and equity, depending on the particulars of the plan and complex accounting rules." From the table labeled "Reality Gap": IBM's expected gains for its pension fund were $6,264 Million; the actual return was a loss of $3,964 Million; resulting in an unexpected loss of $10,228 Million.


  • TechsUnite.org: AFL-CIO unions, CWA propose H-1B reforms.


  • Common Dreams: Shooting the Messenger: Report on Layoffs Killed. Excerpt: "The Bush administration, under fire for its handling of the economy, has quietly killed off a Labor Department program that tracked mass layoffs by U.S. companies. The statistic, which had been issued monthly and was closely watched by hard-hit Silicon Valley, served as a pulse reading of corporate America's financial health. There's still plenty of economic data available charting employment trends nationwide. But the mass-layoffs stat comprised an easy-to-understand overview of which industries are in the greatest distress and which workers are bearing the brunt of the turmoil."


  • Hartford Courant: Suit Against CIGNA Can Be Class Action. Excerpt: "A lawsuit that accuses CIGNA Corp. of discriminating against older employees in the way it converted a pension plan has been approved to become a class action. The certification by Judge Dominic J. Squatrito in U.S. District Court in Hartford could make more than 10,000 present and former CIGNA employees part of the class, said Thomas G. Moukawsher, co-counsel for the plaintiffs and a partner in the Hartford law firm Moukawsher & Walsh. The lawsuit that was filed in December 2001 stems from CIGNA's Jan. 1, 1998 conversion from a traditional pension plan to a 'cash balance' plan."


  • Pension Rights Center: Letter to the IRS commenting on Proposed Rules on Disclosure of Relative Values of Optional Forms of Benefit [PDF--65 KB]. Excerpt: "When participants and beneficiaries are offered the option of taking their benefits as either a lump sum or an annuity, they reasonably assume that the dollar values of the two options are equal. They have no way of knowing that Treasury regulations permit pension plans deny them a significant portion of their pension if they choose payment options that are not specifically mandated by the law. The most dramatic examples of pension forfeitures occur when a participant, who has met all of the requirements for a “subsidized early retirement benefit,” chooses to collect his or her pension as a one-time lump sum payment, rather than as a series of lifetime monthly payments. In this situation, the participant can lose more than half the value of his or her expected benefit. That is because the dollar amount of the lump sum paid by the plan can be worth 40 percent of the dollar value of the annuity."


  • Rumors this week include:
    • "ibmresearch" (full extract): "Word is out that all BCS RDM's (Resource Deployment Managers) are history. Total stealth cuts appear to be close to 700. Several divisions also appear to be lining up for another round of layoffs.


  • Miami Herald: Pension Conversion. Don't Cheat Older Workers. Imagine your retirement on the horizon. You anticipate a comfortable pension accrued over 30 years working for the same company. But the company converts your pension into a new cash-balance plan -- and your pay-out shrinks dramatically. Proposed new pension rules make this scenario possible -- but shouldn't. Instead, federal rules should ensure that older workers aren't battered financially by pension changes. The IRS temporarily banned conversions to cash-balance plans in 1999 after numerous age-discrimination lawsuits and employee protests, most notably at IBM. Federal rules proposed last month aim to address the age-discrimination concerns -- but don't do so adequately.

Call to action: From "riptoff" (full excerpt): "Remember the 35,000 'second choice' employees who were force into a conversion that scalped 20-50% off their pensions? What do you think the original purpose of pension thieving was, maybe it had something to do with the surplus being used to legally inflate earnings. Well now with some expensive lobbying corporations have found a way to bypass congress and the US justice system by getting some unknown treasury officials to just declare scalping every pension in the US legal. Osama Bin Laden himself couldn't come up with a better plan to decimate the US than to leave the entire baby boom generation broke in their old age and creating a virtual welfare tax state. Unless of course some final solution is dreamed up to deal with tens of millions of old bankrupt boomers. Of course between now and March the Treasury is taking comments on the subject and if enough Americans figure out they are going to get burned, America might have some hope of avoiding this financial holocaust."

The Alliance web site has a simple 3-step process to help write letters to the IRS, your Congressional Representative and Senator, and the President! The process includes printable versions of sample letters to help those who don't have lots of time.

We have until March 13 to make our voices heard in Washington -- if we lose, and the regulations go into effect as currently proposed, two bad things will happen:

  • Companies who still have good pensions in place will have a green light for reducing them -- millions of baby boomers will be forced to pare back their retirement plans substantially, and thousands of them won't figure it out until they retire and see how little the get.
  • Hundreds of open EEOC charges and pending lawsuits against companies that have already slashed pensions through cash balance conversions will most likely be closed out with no help for the employees who already saw their promised retirements slashed.

Why you should care if...

  • You're a young employee: The new Treasury Department rules allow IBM and other employers to change financial assumptions multiple times throughout your career to retroactively reduce your "cash balance". Read Dave Finlay's analysis of how companies can do so.

  • You're a "second choicer": IBM relented and gave you the choice to stay with its traditional pension. Some have speculated they did so since the legality of cash balance pension plans was not clear. The Treasury Department proposal makes it clear that such conversions are legal, and indemnifies corporations against charges of age discrimination. Given a green light from the Treasury Department, IBM could easily force all employees into a cash balance plan.


  • You're a "first choicer": As with "second choicers", given a green light from the Treasury Department, IBM may force all employees into a cash balance plan.


  • You're already retired: As Janet Krueger stated, a class-action lawsuit, Cooper v. IBM asserts that "the hybrid plan IBM converted to in 1995 was age discriminatory, based on the ERISA laws. If the Treasury is allowed to issue regulations declaring that cash balance formulae are not age discriminatory, the court could conceivably leap to the conclusion that the government no longer intends to enforce the age discrimination rules in ERISA. While this would not reduce the pension you are currently collecting, it might eliminate any chance of Cooper v IBM of resulting in a settlement that would amend your pension upwards."

 

 
"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.