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    Highlights for week ending January 18, 2003
  • New York Times: Companies Fight Shortfalls in Pension Funds. Excerpts: "After a three-year bear market, many major American companies are spending large amounts to shore up pension plans that have deteriorated, sometimes drastically. Many companies are also considering ways to reduce their pension obligations to workers, possibly undermining benefits for millions." ... "Although traditional pensions lost some of their luster when stocks were booming and 401(k) plans seemed to go only up, plenty of companies still offer traditional defined-benefit plans — the kind in which companies promise monthly payments from retirement to death. The bear market has taught employees to prize such pensions once again because the market risk is absorbed by the sponsoring company and the benefits are insured by the federal government. With pensions causing so much disruption, companies and the groups that represent them in Washington are considering a range of damage-control measures that could have a lasting impact on Americans' well-being in old age. Whether the most far-reaching measures are taken will depend on how long the current pension squeeze lasts. For example, companies are considering changes to their pension plans that would reduce their financial obligations. One possibility is converting traditional pensions to "cash balance" plans, which are less costly. But such plans have incurred criticism because they can strip older workers of some of the benefits they have been promised. In December, the Bush administration proposed regulations that would make it easier for companies to change to cash balance plans without setting off age-discrimination suits." If link is broken, view Adobe Acrobat version [PDF--21 KB].
    • Janet Krueger comments. Excerpt: "Below is another article reinforcing the notion that it is very bad for business if companies are forced to contribute to their pension funds... I'd like to see more of the articles calculating out how many years of benefit accruals there were where the poor companies didn't contribute at all, but instead benefited from vapor profits. Just as one example, in all of the posts about the 'huge' contribution IBM made to its pension plan in December, did you ever see an article noting that this was a contribution of less than $3000 per employee per year?"


  • Newsweek: Oh, No—More Pension Blues by Jane Bryan Quinn. Excerpts: "I hope you’re getting a really good tax cut because you’re going to need the money. More bad news is trickling in from the retirement front. You already know that your 401(k)—slashed by falling stock prices—won’t be worth as much as you expected. Now traditional pensions are slipping, too. Most workers can count on getting the pension benefits they’ve earned so far. But future benefits won’t grow as fast as you expected. Companies over promised, and are dialing back." ... "Note that pension cutbacks are strictly for the peons. Halliburton Oil gave CEO Dick Cheney early-retirement benefits when he left to run for vice president, even though he hadn’t earned them. CSX Corp. credited CEO (and Bush’s future Treasury Secretary) John Snow with 44 years of service, even though he worked only 25. You got the message: it’s good to be the king."


  • Time Magazine: There's a New Way to Think Big Blue. Tech seldom delivers on its promises, but IBM's Sam Palmisano plans to change that.


  • eWeek: L1s Slip Past H-1B Curbs. Excerpts: "Dec. 20 was supposed to be Michael Emmons' D-Day, the day he was to lose his contractor position. It would have been, had Emmons not quit his post at Siemens AG's Siemens Information and Communication Networks division, in Lake Mary, Fla., on Nov. 22 rather than wait to be replaced by a worker from Tata Consultancy Services holding an L1 visa. Tata is a Mumbai, India, IT services company contracted by Siemens to do, among other things, Emmons' job: connecting Web sites to SAP R3 applications. The story line is familiar: Large U.S. company outsources work to offshore service provider that uses foreign nationals with temporary work visas to take what could have been domestic IT jobs." ... "To Wipro, said Badiga, the L1 is just one more tool that's helping the company prosper. To Emmons, however, it's a "nasty tool Congress created to get cheap labor for their corporations." And to a growing number of recession-scarred IT workers, the L1 visa is just one more thing to worry about."


  • Daschle Introduces Pension Reform Bill.


  • American Association of Individual Investors: What You Need to Know to Protect Your Pension Benefits.


  • Forbes: State Of The Unions. Wooing White Collars. Excerpt: "The AFL-CIO study observed that professional and technical workers 'clearly want some form of representation and a collective approach to addressing their work-related concerns,' but at the same time, 'they still wonder if a union is the answer.' Therefore, labor organizers seeking to make inroads among these white-collar workers must allay their concerns 'that unions exacerbate workplace tensions by relying too much on confrontational tactics.'"


  • Reuters: Worries About IBM Growth Hit Stock. Excerpt: "IBM on Thursday said quarterly revenue was $23.68 billion, beating analyst expectations. But excluding the effect of currency and the company's purchase of PricewaterhouseCoopers Consulting, sales actually fell 2 percent from a year earlier, leading some analysts to question its growth prospects. During the 1990s, IBM was lauded for its ability to increase earnings beyond the pace of its slow revenue growth due to income from its pension fund assets and sale of patents and other intellectual property. But in early 2002, criticism of IBM's accounting methods and disclosure mounted, and investors began calling for less dependency on such income and more focus on growing revenue."


  • "ibmmike2006" provides an interesting list of reduced benefits for IBM employees dating back to the early 1990s...


  • "survivor_too" recommends a book to IBM CEO Sam Palmisano...


  • The Association of Members of IBM UK Pension Plans (AMIPP) has published its Newsletter No. 14 with pension news affecting IBMers in the United Kingdom. The AMIPP site contains many resources for UK employees, including an on-line message board.

This week on the Alliance@IBM Site:

  • Union demands Executive action over future of 700 IBM jobs - News from IBM Scotland. Excerpt: "Union leaders demanded urgent action from the Scottish Executive last night as fears mounted of up to 700 jobs losses at IBM’s electronics plant in Greenock. The computer giant has called in all its manufacturing workers to a meeting on Tuesday, two days before their winter break was due to end, at which the job losses are expected to be announced. Last night, union leaders called on ministers to take action to prevent any jobs being lost. Officials at Amicus said they "would not be surprised" if the meeting spelled the end of computer building at the Scottish plant."


Pension Action Cash Balance Alert, from the Pension Rights Center:

We are asking the President to withdraw his devastating pension proposal and resubmit a plan for Congress' consideration that would protect the retirement interests of older employees. The President's proposal will open the door for large companies to cut in half the value of older workers traditional annual pensions. The President's proposal will legalize age discrimination. Read more, including how you can help...

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
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.