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    Highlights—November 27, 2004
  • Janet Krueger answers a question concerning the Cooper v. IBM pension lawsuit. Full excerpt: Q: I am a 20 year IBMer and have been thru many of the pension plan changes and know I should be part of at least one of the groups for the class action, but I have gotten no info from the company on anything. Has there been some mailing of info out to employees with this info, have I missed something? Can someone give me a synopsis of where the suits stand today? A: Both the CB Plan and the Old Plan (PCF) have been ruled unlawful. The ruling can be downloaded from the file area of this board. More info on Cooper v IBM is at www.allianceibm.org/pensionlawsuitfaq.htm. Settlement notices for subclass 3 of Cooper v IBM have been mailed. Detailed information is available at www.cpr100.com/subclass3/. If you think you should have been a member of this subclass, and you did not receive a notice, you need to write a letter to the contacts listed on that page -- include your name, snail mail address, IBM employee number, and the dates you were employed at IBM. Settlement notices for subclasses 1 and 2 are still being finalized and have not been mailed. The Home page of this board will be updated when they are final, and will include mailing dates.


  • Many links to additional coverage of the Cooper v. IBM lawsuit are available in these previous editions of these highlights:

  • m_l_benefit_seeker provides the rates IBM quoted him on July 14, 2004 for retirement medical coverage under the new Future Health Account (FHA):
      PPO Coverage
    (Monthly)
    HMO Coverage
    (Monthly)
    Employee only: $499.54 $360.85
    Employee plus 1 dependent: $999.00 $721.71
    Employee plus 2 dependents: $1498.00 $1082.56

    • Reimbursements under the PPO option are subject to a $507 deductible per person.
    • HMO prices are subject to $14 co-payment per visit.
    • Dental and Vision coverage is not included in these rates
    • Medco Health low cost prescriptions are included.

  • The Alliance@IBM provides information about IBM's Future Health Account in these articles:

  • Employment Law Practice Center: IBM Gets the Big Blues Over Age Discrimination Suit. Excerpts: Does the pension plan at International Business Machines Corp. treat its older workers fairly? IBM says yes, because it's contributing the same percentage of pay to the plan for every employee, regardless of age. But older workers who have sued the company say no, because they're receiving lower benefits than younger employees. Now IBM is asking a circuit court to decide the question. The suit over the IBM plan was filed five years ago in federal court in East St. Louis, Ill., on behalf of 130,000 current and former employees. In two other cases, federal judges have ruled that the kind of pension plan in place at IBM -- known as a cash balance plan -- isn't discriminatory. But in a ruling last year, the district court judge in the IBM action disagreed. This past September, the Armonk, N.Y.-based computer giant reached a partial settlement with the plaintiffs in which it secured the right to appeal the judge's decision to the 7th U.S. Circuit Court of Appeals. ...

    In a statement released after the September settlement, Douglas Sprong, a member of the plaintiffs' legal team, said, "We are confident the class will win any appeal, because … older workers received less than their younger counterparts for no reason other than age." Sprong is a partner with Korein Tillery in Belleville, Ill. The IBM plaintiffs are supported by AARP (formerly the American Association of Retired Persons), which has filed amicus briefs in some of the suits challenging cash balance plans. Mary Ellen Signorille, senior litigation attorney in AARP's Washington, D.C., office, says, "You can still have a cash balance plan that does not violate the law if it is designed properly." She adds, "Of course, it won't be as cheap as what [companies] want." Signorille maintains that in order for a plan to be legal and nondiscriminatory, a company would have to increase the amount of its annual contribution for each employee as the worker grows older. ...

    James Klein, president of the American Benefits Council in Washington, D.C., says that "even if IBM wins, I don't see the critics of cash balance plans stopping there. They will try to undermine those plans in the courts and in Congress." Klein's group aids Fortune 500 employers and other organizations in operating pension plans that cover 100 million employees. Klein adds that the real losers could be employees. He notes that ERISA does not require companies to provide pensions, and only states that the process for providing a pension
    shouldn't be discriminatory. In Klein's view, "Most definitely, many companies would drop pension plans altogether" if IBM loses. The company's Rosenberg agrees, saying that if Murphy's ruling stands, it could force many businesses to end their pensions or reduce the number of employees who receive pensions. The one thing worse than a small pension, it might turn out, would be no pension at all.
    • "dave49_98" comments. Full excerpt: Well, let me say Ms Reisinger is full of crap, just like the benefits advisors. I am sure she has her big ass pension set aside and guaranteed so she has no worries. Now she totally glosses over the fact that time and again it has been shown that 30 years under the cash balance plan equals ONE HALF of the original plan. She can sugar coat it anyway she likes but they are stealing and cutting benefits. Judge Murphy told them they got greedy. Is anyone else sick and tired of the sky is falling put out by these people?
    • "alwaysontheroad4bigblue" comments. Excerpt: Klein's argument is specious. If I remember correctly, not a single company has instituted a new "from scratch" cash balance pension plan. And, a company can't simply drop an existing defined benefit pension plan without suffering severe tax penalties. The *only* reason cash balance pension plans were created was to allow corporations to weasel out of their obligations to employees, to bolster the bottom line, and to enrich executives and the management consulting firms that dreamt up CB pensions.
    • "justa_bean_counter" comments. Full excerpt: ERIC is not our friend. ABC is nor our friend. The spin in this article is part of their script. Expect more of it when Congress 'weighs in'. That means Congress has had their palms greased and will try to change the law and make cash balance plans legal. We can't let that happen. The spinmeisters say that the pension system will break if Congress doesn't make them legal. I tell you the truth, the pension system will break if Congress makes them legal! THINK about it.

  • Forbes: IBM to Buy RBC's Liberty Insurance. Excerpt: About 700 Liberty employees will become part of the new unit, while RBC's U.S. operations will remain based in Greenville, S.C., where it has more than 200 employees. The company also has a Kansas City, Mo., office, and a field force of about 400 full-time agents. IBM did not say in a press release whether there would be layoffs related to the deal. Additionally, IBM agreed to provide RBC Insurance with business processes for its U.S. operations, including contact center management, policy administration, claims management and payment receipt and reconciliation.


  • Boston Herald: Economic 'Armageddon' predicted. Excerpts: Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish. But you should hear what he's saying in private. ... In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates further and faster than he wants. The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded. Less a case of ``Armageddon,'' maybe, than of a "Perfect Storm." Roach marshalled alarming facts to support his argument. To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day. That is an amazing 80 percent of the entire world's net savings. Sustainable? Hardly.


  • CNET News: Computer Associates taps ex-IBM exec as its next chief. Excerpts: Computer Associates International on Tuesday named former IBM executive John Swainson as its next CEO, ending a seven-month search for a permanent replacement for Sanjay Kumar, who was ousted in an accounting scandal. Swainson will take over as chief executive within the next four to six months. Until then, he will report to interim CEO Kenneth Cron, former CEO of Vivendi Universal Games, who will continue in his position as a director on CA's board. John Swainson is CA's incoming CEO. Swainson, who was also named president and elected to the board, is a 26-year veteran of IBM, where he guided the buildup of the company's WebSphere middleware product line. Most recently, he was vice president for IBM's worldwide software sales, a position he attained in July.


  • Forbes: Swainson: Computer Associates Gives Incoming CEO $8.6M Package. Excerpt: Computer Associates International (nyse: CA - news - people ) will grant incoming Chief Executive John Swainson, 50, a pay package adding up to more than $8.6 million in salary, signing bonuses and stock. The newly minted CA executive--he started as president on Monday--hails from IBM, and the package is "in respect of certain benefits he would have received had he remained employed" at the business computer giant. The package includes a $2.5 million cash signing bonus, a $1 million base salary and a stock grant of 100,000 shares for signing with Computer Associates, according to the agreement filed with the U.S. Securities and Exchange Commission.


  • Washington Post: Ownership Society Still Needs Rules. Excerpt: The Bush team's "ownership society" is mainly about Social Security: It wants to convert part of this government program into private retirement accounts. But the administration is skeptical of corporate collectivism as well as the governmental variety. It's not sure that your employer should provide your health care or your retirement plan. And it may well be right.


  • New York Times: Growth Rate in Health Cost to Employers Slowed in '04. Excerpts: After years of double-digit cost increases, the rate of growth in what employers pay for employee health insurance slowed significantly this year, according to an annual survey to be released today. The average employer cost for health benefits for an employee rose 7.5 percent in 2004, to $6,679, the lowest increase since 1999 in a survey of about 3,000 employers by Mercer Human Resource Consulting. Employers faced average increases of 10.1 percent in 2003. But this slowing rate was largely the result of employers shifting more of the cost onto their employees and changing the kinds of plans they offer, said Barry Schilmeister, a senior health care consultant for Mercer.


  • Watson-Wyatt, courtesy of Benefits Links: Traditional Pension Plans Outperformed 401(k) Plans During Last Bear Market, Watson Wyatt Analysis Finds. Excerpt: Rates of return for professionally managed traditional pension plans outpaced those for employee-directed 401(k) plans in 2000 through 2002, the nation's most recent bear market. This reversed the trend of the prior three years - 1997 to 1999 - when 401(k) plans achieved higher returns than traditional pension plans, according to an analysis by Watson Wyatt. The analysis found that defined benefit (DB) plans and employer-sponsored 401(k) plans both performed poorly in each of the three years from 2000 to 2002 due to the declining stock market. DB plans, however, outperformed 401(k) plans in all three years - by 4.28 percentage points in 2000, 3.48 percentage points in 2001, and 3.83 percentage points in 2002. The year 2001 marked the first time both plans declined in the same year since the analysis was first conducted in 1990.


  • Washington Post Letter to the Editor: Going Beyond the 'Malpractice Myths'. Excerpt: William R. Brody is wrong about the "myths" surrounding medical malpractice. I represent patients in malpractice cases, but don't take my word for it. Nonpartisan groups such as the National Center for State Courts, the Bureau of Justice Statistics and the Government Accountability Office (GAO) say:
    • Malpractice payouts and lawsuits have declined steadily in the past decade, once inflation and population growth are taken into account. No explosive growth has taken place.
    • Malpractice lawsuits have not caused a shortage of physicians. That isolated rural pockets lack access to health care has more to do with geography than with the courts, according to the GAO.
    • Three House committee chairmen asked the GAO last year to document the costs of "defensive medicine" caused by fear of malpractice suits. The GAO could find no evidence that this occurs.
    • The legal system has full protection for physicians who engage in peer review to improve care. Their deliberations are confidential and are immune from lawsuit in most jurisdictions.
    • Juries do not award bundles of cash out of misguided sympathy. Most lawsuits are won because of rigorous proof of inexcusable departures from standards of medical practice. Trial judges and appeals courts must scrutinize jury verdicts to be sure that they are reasonable in outcome and amount.
    • Doctors are the victims of the reckless pricing practices of their own insurance companies, which discounted premiums steeply during the 1990s. Big increases in premiums follow downturns in the financial markets.
    More than 100,000 patients are hurt or killed each year by preventable mistakes in hospitals and clinics. The medical care system could do a lot about this by implementing basic safety controls that have long existed in other high-risk enterprises, such as commercial air travel (where victims' rights to legal redress are not restricted). Blaming the messenger only hurts patients and delays addressing the real issues.


  • Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC.
Coverage on H1-B and L1 Visa and Off-Shoring Issues
  • Computerworld: Congress ups H-1B visa cap by 20,000. Excerpts: Responding to pressure from high-tech businesses and industry groups, Congress this weekend approved an increase in the number of H-1B visas by 20,000 but limited it to specially qualified students. The legislation, included in the omnibus budget bill, allows foreign national master's and Ph.D. graduates of U.S. universities to apply for an H-1B visa, according to people familiar with the bill. Businesses such as Microsoft Corp. and Intel Corp. and high-tech trade groups have been urging Congress to take action, while organizations representing IT workers wanted Congress to keep this year's cap at 65,000. ... Groups representing professionals who work in high-tech fields, such as the National Society of Professional Engineers in Alexandria, Va., opposed any increase in the cap. Al Gray, the group's executive director, said the 65,000 cap is as high as it should be, and indications are that there "are no really serious shortages" of engineering and high-tech jobs. He said H-1B workers are competing for U.S. jobs, "and that's the concern."

 

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