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.
for week ending April 5, 2003
- Money Magazine: The Changing
Face Of Pensions. Excerpts: "As she moved up the ranks at AT&T, the last thing
Jane Banfield worried about was her pension. She'd started out in sales in 1982, worked her
way up to management and, by the late '90s, was starting to dream of early retirement. Then
in 1997 AT&T changed its pension plan, and veterans like Banfield saw their benefits slashed.
Now 54, she'll receive about $15,000 a year when she turns 65, instead of the $30,000 she had
been expecting. 'I didn't think this could happen,' Banfield says. 'It's a benefit I always
assumed would just be there.'" ... "As a result of these disadvantages for older workers,
more than 800 age-discrimination claims have been filed with the Equal Employment Opportunity
Commission, and several employers who've switched to cash-balance pensions--including AT&T
and IBM--are embroiled in class-action lawsuits challenging the plans. But new IRS rules, expected
to become final this year, clarify how employers can convert to cash-balance plans without violating
age-discrimination laws. Already, 348 cash-balance switches are awaiting IRS approval."
... "Educate yourself: You'll find information on cash-balance plans, benefit calculators,
and links to news and lawsuit documents at www.pensionrights.org
- Congressman George Miller (D-CA): As
Deadline Nears, Members of Congress Voice Detailed Objections to President Bush's Proposed Change
to Pension Plan Rules. Excerpt: "Lawmakers from the House and Senate today continued
their effort to stop President Bush’s plan to alter federal pension rules that would make
it easier for companies to cut older employee’s pension benefits by as much as half."
- ABC News: Pension Problem. Some
Workers Find They’re Not Getting The Retirement They Counted On. Excerpt: "'Even
if you have a good pension plan now, you may find that your company is going to switch that
plan or freeze that plan and in the future you may not get everything that you expected,' says
Karen Friedman, director of policy strategies for the Pension
Rights Center, a Washington-based consumer-rights group promoting retirement security."
... "The most controversial switch under way is toward so-called cash-balance plans, which
have been adopted by more than 500 companies, including IBM, Verizon and Duke Energy. Unlike traditional
defined benefit plans, in cash-balance plans, the employer's contribution does not increase with
a worker's seniority and salary."
- In an historical article (December 28, 1999), Ellen Schultz of the Wall Street Journal outlines
a Single Sentence By the IRS Paved the Way to Cash-Balance Plans." Excerpt: "In
August 1991, the Internal Revenue Service issued a long-awaited set of proposed pension regulations.
In it was a single sentence, not present in a draft copy just 11 days before, that seemed to
protect companies that were changing their pension plans to an ingenious new system. 'I sleep
better at night' knowing the sentence is there, said an attorney with benefits consultants William
M. Mercer at a conference for actuaries the following March. And so, apparently, did clients.
In the years since, hundreds of companies have converted their conventional pensions to 'cash
balance plans,' which save them money by reducing the pensions accrued by older workers. Specifically,
the sentence said that the new kind of pension didn't violate age-discrimination laws. Employers
are sleeping less soundly these days. In 1999, as millions of older workers realized exactly
how cash-balance pensions work, they complained loudly enough that four federal agencies and
Congress began looking into whether the plans do, in fact, illegally discriminate. Besides the
IRS, the agencies are the Equal Employment Opportunity Commission, the Labor Department and
the General Accounting Office."
- CWA News: CWA Sways GE
on Executive Pay Formula. Excerpt: "General Electric, in response to a shareholder
proposal submitted by CWA, has agreed to exclude pension fund income from a factor used for
determining executive compensation. GE's action came as the union prepared to mobilize workers
and to present a range of proposals aimed at limiting executive compensation at several of its
employers' annual shareholder meetings. The decision addresses a distorted - and inflated -
definition of 'earnings per share,' one of the key measures GE's board of directors until now
has used as a measure of top executives' performance and a factor in setting their bonus and
other incentive compensation. Linking executive pay to pension income creates an incentive for
companies to cut pension benefits for workers and to withhold cost-of-living increases. GE has
frozen pension benefits at 2000 levels while continuing to lay off workers and increase health
care co-payments for IUE-CWA members."
- Editor's note: Donald Parry, an IBM employee, submitted a similar shareholder proposal for
the 2002 IBM Shareholder's Meeting. His proposal was voted down. The April 30 issue of the
Journal News (Westchester, Rockland, and Putnam counties in New York) features an article
titled IBM faces shareholder
dissent at meeting provides an excellent historical synopsis of Mr. Parry's and other
year 2002 proposals.
- Washington Alliance of Technology Workers (WashTech): Outsourcing
Presentation Makes Waves in Seattle. Excerpt: "While union activists handed out fliers
and carried signs reading “Where do you want your job to go today?” on a sidewalk
in downtown Seattle yesterday, two British executives extolled the virtues of outsourcing tech
jobs to India in the offices of the Seattle Chamber of Commerce, 24 floors above. 'Our local
economy is in crisis, and that crisis is partly being caused by corporations sending good living
wage jobs to other parts of the world, where workers will do them for a quarter of the cost,'
said Jake Carton, an organizer for Jobs With Justice who was among those who demonstrated outside
the building on Wednesday."
- CWA News: CWA Wants Government
Action on Tech Outsourcing. Excerpts: "CWA is pressing Congress to authorize an investigation
by the General Accounting Office into the growing number of U.S. information and technology
companies that are shifting U.S. technology jobs overseas. Numerous tech and information companies
have been involved in the transfer of U.S. work overseas, including AT&T, Microsoft, Bank
of America, Dell, Eastman Kodak, IBM Corp. General Electric Co.'s medical services division
and Hewlett Packard, Bahr told members of Congress." ... "'The American public was
told not to worry about the loss of manufacturing jobs as they would be replaced with high-tech
service jobs' he said. 'Not only was this flawed logic at the time, but now that very premise
is challenged. If high-tech jobs are moving overseas, what will sustain the American economy?'"
- Business Week: Still
Waiting for Corporate Reform. The lessons of Enron-esque scandals haven't sunk in yet. Just
look at the eye-popping new allegations of executive-suite malfeasance.
- Business Week: Options:
"Probably the Worst Incentive". Compensation pro Matt Ward on why this popular
benefit is so bad -- and what would work much better.
- Wall Street Journal: As
Workers Face Pension Cuts, Executives Get Rescued. Excerpt: "At a time when pension
plans at many companies are increasingly in peril, employers have been taking steps to protect
the jumbo pensions promised to top executives. Delta Air Lines disclosed in filings last week
that it had set up special retirement trusts last year to ensure pension payments to 33 of its
executives in the face of severe turbulence for the industry. The disclosure angered Delta employees,
who face pension cuts as the carrier seeks to lower its costs."
If link is broken, view Adobe Acrobat version [PDF--29
- Wall Street Journal: More
Companiess Seen Cutting Contributions To Retirement Acccounts. Excerpt: "A growing
number of companies, searching for ways to cut costs, are suspending their matching contributions
to workers' 401(k) retirement accounts. Such a move by broker Charles Schwab & Co. won wide
attention in March because the company has been outspoken in its support of the investment vehicle.
But Schwab is not alone." ... "'Many people didn't realize they were dealing with
a profit-sharing plan instead of a conventional pension plan where contributions are set,' she
(Alicia Munnell, director of the Center for Retirement Research at Boston College) said. '"They
are tough retirement vehicles in my view and this idea that employer can match one year and
not match another, I think is another factor that makes them less than perfect vehicles for
people to do their retirement savings.'"
If link is broken, view Adobe Acrobat
version [PDF--25 KB].
- Midrange Server: Gartner
Forecasts Thaw in IT Ice Age, Sunny Days for IBM. Excerpt: "Looking beyond the current
economic uncertainty and global unrest, Gartner analysts are forecasting a general upturn for
the technology sector. Gartner also believes IBM is the company best positioned to take advantage
of the pending turnaround. Polishing his crystal ball at the Gartner symposium in San Diego
last week, Gartner CEO Michael Fleisher explained why the IT sector is on the verge of rejuvenation,
which will likely take shape late this year and blossom in 2004."
- Dow Jones Business News: Indian
Software Firms Face Threat From Foreign Invaders. Excerpts: "Indian software companies,
which have flourished by tapping local low-cost technology workers, face a new threat as global
competitors aim to derive similar cost advantages by setting up units within the country. Some
of the world's biggest technology services companies, including Accenture Ltd. , Electronic
Data Systems Corp. and International Business Machines Corp., have all recently announced plans
to expand their operations in India." ... "India's English-speaking technology workers
tend to earn much less than their Western counterparts because of the country's lower cost of
living. That has enabled Indian firms to charge customers in the range of $15-30 per hour -
far below what the same work would cost in the West. Firms like Accenture and IBM, for instance,
charge about $60-70 per hour in the U.S. For high-end work, their charges can go up to $150-200
- "flatsflyer" comments
on the lack of cost of living adjustments in IBM's pension plan. Full excerpt: "From
1959 through 1990 the annualized rate of COLA's for IBM Retiree's was 3.7% A COLA was not granted
each and every year but was usually granted within 18 months from the previous one. Since Three
Finger Lou took over there was one COLA and for most people it was
less than 1%, nothing if you retired after 1995. To make headlines the company stated the COLA's
were up to 20%. That applied to only those retired prior to 1975 and I've yet to hear of any
one collecting it as the average retiree still only collects 87 checks. The reason that COLAs
are not granted is because IBM Management is corrupt, greedy and cannot run the core business
on a profitable basis. Since they need to feed their greed they take the money from employees,
stockholders and retirees."
- "gonein92" lists
"recent" cost of living adjustments in IBM's pension. His table is repeated here
in its entirety:
|Effective Date of Increase
|May 1, 1969
|November 1, 1974
|November 1, 1976
|December 1, 1978
|December 1, 1980
|January 1, 1983
|October 1, 1986
|August 1, 1990
|January 1, 2001
||2.5 to 25%
Note: As "flatsflyer" stated, only employees who retired prior to 1975 received a
2001 COLA of 20% or higher.
- "justa_bean_counter" provides a
list of 42 persons that have requested the opportunity to speak on April 9th at a Treasury
Department hearing on proposed regulations that would legalize cash balance pension plans. Several
IBM pension activists, familiar to readers of these summaries, will be speaking.
Call to Action (courtesy of Janet Krueger)
Please call your congress critters, both in the House and in the Senate and ask them to
cosponsor the new Pension Benefits Protection Act of 2003 that will be introduced on April
8. Below is a letter being sent around the hill by Warren Gunnells in Representative Sanders'
office that you can refer to. They currently have 108 co-sponsors, but more would be better!
This legislation would both cancel the proposed Treasury regulations, and reduce the risk
that Treasury would modify them slightly and reissue them. Plus it provides a new set of
protections for workers when their pension plans are changed.
Note that employers have always had the right to change their pension plan formulas at
any time -- that is not what we are objecting to. This legislation would prohibit employers
from putting older workers into long periods of wearaway when conversions are done.
Further, it addresses the problem of how to ensure employees are disclosed enough real
information when they are offered a choice between pension plans by requiring that choice
be delayed until the employee retires or leaves the company for some other reason.
Warren Gunnells letter follows:
Please join with over 100 Members of Congress in becoming an original co-sponsor of the
Pension Benefits Protection Act of 2003.
- Requires companies converting to cash balance plans to allow workers who are either
at least 40 years old or have at least 10 years of service the choice to remain in their
traditional defined benefit pension plan.
- Requires the Department of Treasury to withdraw proposed cash balance conversion regulations
that would give companies the green light to violate the pension age discrimination laws
that are on the books.
This legislation has been endorsed by the AFL-CIO, the Pension Rights Center and the Communication
Workers of America.
The attached article from Money Magazine shows how necessary this legislation is for older
workers. (Editor's note: The Money Magazine article is available through a link at the top
of this page). This month, the Treasury Department will hold hearings on its proposed rule
that would give companies the green light to slash the pension benefits of older workers
through cash balance conversions. Ms. Banfield, a loyal AT&T employee, found her pension
cut in half by the company's cash-balance conversion. The proposed Bush Administration rule
would make this type of pension cut commonplace, potentially costing older workers billions
in anticipated retirement pension benefits.
We must stop this assault on the hard-earned nest-egg of millions of older Americans. To
co-sponsor this legislation, please contact Warren Gunnels in Rep. Sanders' office at 5-4115.
Bernard Sanders, Member of Congress
George Miller, Member of Congress
Virgil Goode, Member of Congress
Maurice Hinchey, Member of Congress
Sherwood Boehlert, Member of Congress
- New York Times editorial by Paul Krugman: Channels
of Influence. Excerpt: "There's something happening here. What it is ain't exactly
clear, but a good guess is that we're now seeing the next stage in the evolution of a
new American oligarchy. As Jonathan Chait has written in The New Republic, in the Bush
administration 'government and business have melded into one big "us." ' On
almost every aspect of domestic policy, business interests rule: 'Scores of midlevel appointees
... now oversee industries for which they once worked.' We should have realized that this
is a two-way street: if politicians are busy doing favors for businesses that support
them, why shouldn't we expect businesses to reciprocate by doing favors for those politicians
— by, for example, organizing 'grass roots' rallies on their behalf?"