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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 11, 2003
  • Poughkeepsie Journal (September 10, 2002): Man sues; says IBM axed him in retaliation. Poughkeepsie Journal (January 8, 2003): Big Blue settles with former employee over age-discrimination claim. Excerpt: "IBM Corp. and an ex-employee who sued the company, alleging that it fired him for making complaints of age bias, have come to terms. Just what those terms are, neither will say. But federal court officials in Florida confirmed that the case, Mark D. Cring vs. International Business Machines Corp., has been settled. One of Cring's charges was that the company tolerated a hostile atmosphere by keeping in its employ a manager who brought guns to work in violation of company policy."


  • New York Times: Hi, I'm in Bangalore (but I Dare Not Tell) Excerpt: "With frosted glass and funky amber lights playing off the turquoise walls, the offices of Customer Asset look more like a Santa Fe diner than a telephone call center in southern India. The cultural vertigo is complete when employees introduce themselves to a visitor. 'Hi, my name is Susan Sanders, and I'm from Chicago,' said C. R. Suman, 22, who is in fact a native of Bangalore and fields calls from customers of a telecommunications company in the United States. Ms. Suman's fluent English and broad vowels would pass muster in the stands at Wrigley Field. In case her callers ask personal questions, Ms. Suman has conjured up a fictional American life, with parents Bob and Ann, brother Mark and a made-up business degree from the University of Illinois."


  • CNET News: IBM to outsource server manufacturing. Excerpt: "Just a year after outsourcing the manufacturing of its NetVista desktop PCs, Big Blue will do the same for its X-Series servers and IntelliStation workstations sold in North America and Europe. The contract will go to San Jose, Calif.-based Sanmina-SCI, which also took over the manufacturing of IBM's NetVista desktop and purchased IBM facilities in the United States and Scotland last year, sources said Tuesday." ... "Sanmina-SCI will handle configuration of some of the servers, which will be manufactured in China. IBM will continue to handle configuration of some servers as well." ... "Despite outsourcing desktops and some servers, IBM plans to keep its ThinkPad notebook line in-house. But the company has also streamlined manufacturing there. It is expected to announce that all of its ThinkPad manufacturing has been consolidated in Shenzhen, China."


  • After being absent for a few years, IBM returns this year to Fortune's list of "100 Best Companies to Work For" at number 38. See the list. See the entry for IBM. Fortune's "Summary" for IBM: "IBM employees have access to 67 day-care centers worldwide (61 in the U.S.). And since 1984 the company has invested more than $200 million in dependent care, including child- and elder-care subsidies."


  • TechsUnite.org: AFL-CIO unions, CWA propose H-1B reforms. Excerpt: "The H-1B program is completely disconnected from the realities of the U.S. labor market. While spot shortages in certain professional occupations may exist from time to time, H-1B fails to address these specific needs. Instead the program floods the marketplace with the potential of 200,000 or more professional guest workers each year. It is estimated that there may be as many as a half million H-1Bs in the U.S. today."


  • The Vault IBM Business Consulting Services (BCS) Employee Message Board has been busy lately with reports of "resource actions" in BCS, especially among former PriceWaterhouse Cooper consultants. Some particularly interesting posts include:
    • The point is simply...
    • An e-mail from Mike Collins, Americas Leader, Business Consulting Services sent to selected BCS employees. Excerpts: "The purpose of this note is to inform you of a resource action in the US, which will take place by mid-January." ... "Overall, we expect to reduce the size of our total US Business Consulting Services workforce by slightly less than 2%." ... "These actions are never easy to undertake, particularly at this time of year. We will move quickly in January to individually inform those who are part of this action. I appreciate your understanding as we take these difficult but necessary steps to maintain our competitiveness in the marketplace and better serve our clients."
    • A surplused BCS employee suggests that IBM may want to remove "surplused people from these kinds of mailings since we no longer have a career with IBM." Read employee's comments along with the mailing from Ginni Rometty, Managing Partner, IBM BCS. Excerpt from Ms. Rometty's mailing: "In my note last week, I promised that I would be stepping up my communications with you. Here then is the next step: I invite you to spend 10 minutes with me to consider your career potential with IBM Business Consulting Services. We've already talked plenty about the impact that BCS will have in the marketplace; now it's time to focus on what it all means to you."


  • Wall Street Journal: Div Tax Cut Is No Bone For Retirement. Excerpt: "Plans to make dividends tax-free to individual investors will not help investors where they need it most, and in fact, it may hurt them. That's because a good chunk of individual investor assets are locked away in tax-sheltered retirement plans, like the 401(k) and the IRA. These plans are already exempt from paying taxes on dividends, so making them tax-free changes nothing. In fact, the plan could hurt American's nest eggs if the price of dividend paying stocks rise due to the new tax-free aspect, because then investors would be paying a premium for a benefit that they don't receive." If link is broken, view Adobe Acrobat version [PDF--23 KB].


  • Orlando Sentinel: Changes may shrink nest eggs. Excerpt: "When Marilyn Bowden began her career at Delta Air Lines more than two decades ago, she didn't think much about retirement. But with all the problems facing the airline industry today, the 44-year-old Bowden has given plenty of thought to life after Delta. And now, on top of just keeping her job, she worries that the income she counted on in retirement will be slashed. Late last year, Delta announced it would phase out its current pension plan and replace it with a so-called cash-balance plan. The move will save the beleaguered carrier $500 million over the next five years, but it will reduce retirement benefits for an untold number of employees."

    IBM Corp. was the poster child for criticism of such plans. It announced its intention to convert its existing pension to a cash-balance plan in 1999. Workers rallied to oppose the effort. Some sued the company. The computer maker relented and allowed older employees to remain in the conventional pension. Concerns about age discrimination sparked the Clinton administration to impose a moratorium on cash-balance plans three years ago. Companies can still adopt the plans, but they do not receive the approval of the Internal Revenue Service -- meaning they could be subject to back taxes or penalties. The Bush administration's new proposal, which could take effect by mid-year, would lift the IRS moratorium and make it legal for companies to offer cash-balance plans even if older workers' benefits are reduced. The proposal also gives companies the right to temporarily stop contributing to the pensions of older workers so younger workers in cash-balance plans can 'catch up.' 'I think this will be a huge raid on the pensions of millions of workers, who will end up receiving 30 percent to 50 percent less than what they anticipated,' said U.S. Rep. Bernie Sanders, I-Vt., who has been a leader in Congress criticizing the plans. 'Unless we stop this, a whole lot of middle-class families are going to be hurting big time.'"


  • Congressman Bernie Sanders: Drug Giant Glaxo Moves to Cut Off Supplies to Canadian Pharmacies Selling to Americans. Excerpt: "In a move that is sure to re-ignite the battle in Congress over Americans’ ability to purchase lower price prescription drugs from Canada, pharmaceutical giant GlaxoSmithKline has informed Canadian pharmacies and wholesalers who sell into the U.S. that they will no longer be able to buy Glaxo products after January 21, 2003. Rep. Bernard Sanders (I-VT) -- the first member of Congress to take constituents across the border to highlight the disparity in prescription drug prices between the United States and Canada -- responded sharply to Glaxo’s threat, calling it a “direct attack on the health of American prescription drug consumers.”


  • Congressman Bernie Sanders editorial: Don’t Steal Our Pensions. Excerpts: "And now, new regulations proposed by Bush’s IRS threaten to destroy one of the most valuable benefits that working men and women, through their unions, successfully fought for in the 20th century, namely the traditional defined benefit pension plan. For millions of workers, traditional pension plans were the key to a secure retirement. Once they reached retirement age, they were to receive a monthly pension benefit based on a formula that included their longevity on the job and the compensation they received. But about ten years ago corporate America decided that it was 'too expensive' to keep the promises they made to older employees. They preferred to give out hundreds of millions in stock options to their CEOs. So, some high-paid pension consultant came up with a gimmick that would lower the amount corporations have to pay for their workers’ pensions by cutting benefits by as much as 20-50 percent. These new plans, called cash balance plans, were designed specifically to prevent employees from being able to figure out what they were getting, and to avoid federal age discrimination laws that protected older workers. I first became involved in this issue when hundreds of IBM employees in Vermont notified me that the pensions they had been promised were going to be slashed because IBM was converting to a cash balance plan."

This week on the Alliance@IBM Site:

  • Bush's War Against Older Workers (from BuzzFlash). Excerpts: "The Bush Administration has recently proposed IRS regulations that would allow corporations to undertake a major raid on the pension benefits that older workers have accumulated. These new proposals, if adopted, would allow companies to avoid federal anti-age discrimination laws, and convert traditional defined benefit pension plans into so-called "cash balance" plans. Under the Bush proposal, the promises made to older workers about pension plans that increase retirement benefits based on longevity would be undermined. While corporations would save billions in pension expenditures, some 8 million older workers could see their benefits reduced by 30-50 percent. Cash balance payment plans have rightfully been condemned by a variety of groups, including the AARP, the Pension Rights Center and the AFL-CIO, because they target the benefits of older workers in violation of current federal law. The Equal Employment Opportunities Commission (EEOC) has received over 800 complaints related to cash balance conversions. And, since September 1999, the IRS has withheld approval of these plans because of concern about their age discriminatory effect. Now, however, the Bush Administration wants to allow these conversions to go into effect."


  • Updated retirees' page. Excerpt: IBM Breaks Promises to Retirees. Those promised medical benefits for life are now told, 'Pay Up'. ' "My family gave their life and blood to IBM, but always with the knowledge that, in the end, our benefits would take care of us -- that IS what we were promised, and also what kept us loyal to IBM. They tossed us aside...'"


Urgent Action, from Linda Guyer, President, Alliance@IBM/CWA Local 1701:

Stop the outrageous Treasury Proposal! Write your reps now; tell them NOT to legalize cash balance pension conversions! This anti-family, anti-worker proposal must not go through.

An outrageous development has just occurred that brings back the pension scandal of 1999 all over again—for ALL employees. The U.S. Treasury has just issued proposed regulations that ELIMINATE all possibilities of claiming age discrimination when companies switch to cash balance pensions plans.

If you recall, IBM changed its mind in 1999 for fear of age discrimination claims, granting the older defined benefit to those over 40 with 10 years of service.

Anyone with the older pension plan is now in danger of losing it. You could lose up to 65% of the money you are expecting. Our pension lawsuit will likely be thrown out if these regulations are put into effect.

We absolutely must fight this. I urge all of you to immediately write the Treasury and your congressional reps and SAY NO to this horrific possibility. IBMers worked for 20 or more years at lower than market salaries, expecting a fair deal by getting a decent pension. Older workers cannot make up those 20 or more years in salary.

Don't let this happen. Go immediately to www.allianceibm.org and check out how to write your letters. Then, please ask your friends and families to do the same.

From the editor of this site, www.ibmemployee.com:

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
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