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    Highlights for week ending December 6, 2003
  • ERISA Blog by B. Janell Grenier, Esq.: Bleak Outlook for the Cash Balance Plan Controversy. Excerpt: Mr. Sweetnam also went on to say, that when the IBM cash balance plan decision was issued this summer (Cooper et al. v. the IBM Personal Pension Plan et al.) and ruled that cash balance plans were inherently age discriminatory, this sparked a lot of interest in the Treasury's cash balance plan regulations. Both the House and the Senate passed amendments to the Appropriations Bills blocking the Treasury from issuing regulations. Mr. Sweetnam said that there are various other measures on cash balance plans being proposed which would seek to resolve the differences in the House and the Senate measures. One of the most interesting comments made by Mr. Sweetnam was that when both of these measures were introduced in the House and the Senate, respectively, there was little, if any, support expressed on the House or Senate floor for cash balance plans.


  • Washington Post: A Lost Retirement Dream for Boomers? Excerpt: In the aggregate, retirees in this country in the year 2030 will be at least $45 billion short of the income they need to cover basic living expenses plus expenses associated with nursing-home or even home health care. From 2020 to 2030 the aggregate deficit will be at least $400 billion, according to the study, which was done by the Employee Benefit Research Institute here, in collaboration with the Milbank Memorial Fund, a New York-based foundation.


  • Wall Street Journal: GM, Others Boost Their Earnings By Pouring Billions Into Pensions. Excerpt: For all the wailing about how the so-called pension crisis might force many employers to put money into their pension plans, there may, in fact, be no better investment for most companies. And many of them are taking advantage of it. Companies have pumped billions of dollars into their pension plans this year, even though most haven't been required to contribute a dime. Rather, by contributing to their pension plans, companies are assured of a guaranteed, effective return that can exceed 40% in the first year, thanks to an interplay of tax and accounting rules. If link is broken, view Adobe Acrobat version [PDF--73 KB].


  • Washington Post: Supreme Court Will Hear Pension-Cutoff Dispute. Excerpt: The Supreme Court said yesterday that it will decide whether federal law bars pension funds from cutting or eliminating benefits of workers who take early retirement and then go back to work. At issue is the "anti-cutback" provisions of the 1974 Employee Retirement Income Security Act, which forbids pension operators from amending their plans in a way that reduces benefits already earned, including those for early retirement.


  • Detroit Free Press: Ford exec gets new task: Solve health care crisis. Excerpt: Ford Motor Co. Chief Executive Officer Bill Ford is so alarmed soaring hospital and doctor bills are destroying U.S. jobs that he has assigned one of his top executives, Vice Chairman Allan Gilmour, to craft a proposal for fixing the nation's health care system. Ford and Gilmour would then take the idea to other companies, unions and ultimately, to public officials in Washington, D.C. The automaker spends about $1,200 on employee and retiree health care for every vehicle it builds, a huge cost that private employers don't bear in countries with government-funded medical care.


  • San Francisco Chronicle: IRS auditing executive compensation practices among large companies. Excerpt: The Internal Revenue Service is auditing two dozen companies to make sure they followed the rules for compensating executives, scrutinizing corporate perks such as stock options and the use of private jets and luxury apartments. ... The audits, geared toward companies with $10 million or more in assets, intensified this fall. The IRS, which is not identifying the companies, plans to use its findings from the first batch of audits and expand the investigations. The agency identified eight areas of scrutiny. The list includes rules regarding the business and personal use of fringe benefits such as private jets and vacation homes. Golden parachutes, or benefits packages granted to executives when they leave a company, are under review. The IRS is examining deferred compensation programs and stock options to make sure they are taxed appropriately.
Coverage on the Medicare Bill
  • Buffalo News: Medicare reform fiasco is worse than 'insidious'. Excerpt: The gaily wrapped MedicaRX program triggers a massive transfer of taxpayer assets - money Americans pay into the Medicare Trust Fund via their payroll taxes - into well-connected private hands. These wealthy special interests spent $1 billion over three years in hammering the new program to their liking. Their expenditures include campaign gifts to the president and candidates for the House and Senate. The brand-name drug makers, insurance companies, doctors and hospitals also created fake "seniors" groups, conducted media campaigns and lobbied Congress so effectively they actually helped write the bill.


  • USA Today: Share of health costs may rise. Excerpt: The Medicare legislation that passed Congress last week could speed the move by employers to boost the share workers pay toward their own health care. The legislation allows individuals to set aside money tax-free in health savings accounts, but only if they have health policies with at least a $1,000 deductible for individuals and $2,000 for families. While the provision initially will be most popular among the self-employed and others who buy their own health insurance, it is likely to influence employers who offer coverage, as well. "It will hasten movement away from low-deductible plans," says economist Paul Ginsburg of the Center for Studying Health System Change, a non-partisan think tank.


  • Physicians for a National Health Program: Stop the HSA Tsunami!!. Excerpt: Anyone following the health care reform debate recognizes the rhetoric of the advocates of “consumer-directed,” “free market” health care. Galen has strongly supported medical savings accounts (now health savings accounts, or HSAs) as a tool to achieve consumer independence in the free marketplace. What Galen fails to point out is that HSAs fragment the insurance pools. The tax advantages accrue to the wealthy, and a tax-favored personal account appeals to those who do not expect to have high health care bills. By removing the large sector of the healthier and wealthier from the traditional insurance risk pools, the higher-cost individuals remaining drive up premiums making traditional coverage unaffordable for those with the greatest health care needs. HSAs are both regressive tax policy, and cruel health policy which rations care by erecting financial barriers for those with the greatest needs.


  • LewRockwell.com: Republican Socialism by Rep. Ron Paul, MD (Republican, Texas). Excerpt: Congress worked late into the night this past weekend to pass a Medicare prescription drug bill that represents the single largest expansion of the federal welfare state since the Great Society programs of the 1960s. The new Medicare drug plan enriches pharmaceutical companies, fleeces taxpayers, and forces millions of older Americans to accept inferior drug coverage – while doing nothing to address the real reasons prescription drugs cost so much. ... Big corporations love the Medicare drug plan, because they want to shift the responsibility for providing drug benefits to their retirees onto taxpayers. Dozens of major companies shamelessly advertised in the Washington Times and elsewhere in support of the Medicare bill for this very simple reason. Their pension plans are dangerously underfunded, so naturally they use their lobbying influence to promote a Medicare drug system. In this sense the Medicare bill is a taxpayer-funded corporate bailout for hundreds of American companies.
Coverage on H1-B and L1 Visa and Outsourcing Issues
  • The Times of India: Indiana opposes outsourcing bill. Excerpt: Indiana lawmakers have opposed a legislation prohibiting foreign workers from doing contract work for the state government saying the ban "would go too far and have unintended consequences". During a two-hour long hearing on the bill, seeking a ban on outsourcing and visas for foreign workers on state projects, Republican and Democrat lawmakers alike on Monday feared that recommending the bill's passage would send a wrong message as Indiana tries to lure overseas investment. ... Under the deal, Tata America International, a New York-based subsidiary of TCS, was hired for a four-year project to upgrade computers used to process unemployment claims at Indiana 's Department of Workforce Development. TCS America won the Department of Workforce Development contract after its proposal came in $8.1 million lower than the next-most competitive bid. TCS had said it would hire local subcontractors and do some local recruiting, but most workers would come from India.


  • Reuters: Accenture to double staff in India to 10,000. Excerpt: Technology consultant Accenture Ltd said on Wednesday it planned to more than double its staff in India to 10,000 people in 12 to 14 months, taking advantage of relatively low wages paid to software engineers in the country. "We expect all segments to grow as we go forward but the business process outsourcing sector is growing more rapidly," Martin Cole, global managing partner for Accenture's outsourcing group, said at a news conference in Bangalore. ... Headhunters, who are scrambling to fill new jobs in India, say global players such as Accenture, IBM Corp and Oracle Corp are offering salaries that are nearly 30 percent higher than what local rivals pay. India's software sector, including the back-office services industry, added about 130,000 -- nearly 25 percent -- to its workforce in the year to March, taking the total to about 650,000. Oracle said in August it aimed to nearly double its workforce in India to about 6,000 by late 2004, hiring people for software, product support, consulting and back-office work. IBM is estimated to have more than 5,000 people in India and is still expanding. Computer Sciences Corp said in June it planned to double its staff to about 1,600 by April 2004.


  • Reuters: IBM services head sees more offshore outsourcing. Excerpt: International Business Machines Corp. will continue to build its services business abroad, an official said on Thursday, saying it makes IBM more competitive, saves its customers money and frees up funds for other purposes. "You can expect continued growth in this marketplace," Doug Elix, the head of IBM's services division, told analysts.


  • Daily Times (Pakistan): US govt ‘helping’ export jobs to India. Excerpt: The US federal, state and local governments have been accused of doing little to protect computer industry jobs from leaving the country for India and, in fact, “giving every indication of helping more and more Americans become unemployed”. Douglas Chick, an expert in information systems, has said in an online statement, “The tech industry in the US is rapidly vanishing, and it’s not just the telephone support positions. It is also the software programmers, hardware and engineering positions. Congress has even made way for overseas workers to come to this country and replace jobs. I have even seen ridiculous articles on the Internet falsely stating that overseas outsourcing will save American jobs. We are all in danger of losing our jobs and if we don’t act now it may be too late”.


  • Times of India: Blair hails outsourcing to India. Excerpt: In an extraordinary coincidence, Britain's largest insurance group on Tuesday announced the flight of thousands of jobs to India , even as the British Prime Minister robustly hailed the skills of "Indian graduates" and defended British companies' right to ship work overseas. Lauding India's chance to become a call-centre superpower, Tony Blair slapped down British trades union calls for government action to protect an estimated 200,000 British jobs being shipped overseas over the next five years.
This week on the Alliance@IBM Site:
  • San Francisco Chronicle: IBM tested for toxic chemical. Expert says firm knew about benzene at plant. Excerpt: IBM apparently knew about the presence of a known cancer-causing chemical in a major work area, but did not try to determine how much of it was in the air, a chemistry expert testified at the company's toxics trial Thursday. Barton Simmons, chief of the hazardous materials laboratory of the California Department of Toxic Substances Control, said IBM's air sampling records from the mid-1980s show that Big Blue scientists had found benzene in a key room at the company's former disk-drive factory in San Jose. But he said it appeared that IBM's staff did not take further scientific steps to try to measure the chemical. Simmons testified as an expert witness for plaintiffs Alida Hernandez and Jim Moore, who allege that they developed cancer as a result of working at IBM's facility. They are seeking unspecified damages.


  • IT Web (South Africa): Pensioners to take legal action against IBM. Excerpt: A group of IBM pensioners will be taking legal action against the company, having received no response to their letter of complaint.The pensioners, who gathered outside IBM's offices in Sandton just under three weeks ago to protest what they say is the improper usage of their pension fund surplus, have sought legal counsel.“We have had no response on our issues, so we are pursuing legal action,” says Roger Hull, an IBM pensioner on the fund's board of trustees.


  • A blast from the past! — IBM Workers United flyer from April 1981 on chemicals and worker safety at IBM. Page 1. Page 2.
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