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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.
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
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
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
- 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
| 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
- 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
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
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
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
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
- 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
- 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