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    Highlights—October 29, 2005

  • New York Times: The End of Pensions. By Robert Lowenstein. Excerpts: To understand why pensions are still important, you have to understand the awkward beast that benefits professionals refer to as the U.S. retirement system. It is not really one "system" but three, which complement each other in the crudest of fashions. The lowest tier is Social Security, which provides most Americans with a bare-bones living (the average payment is about $12,000 a year). The highest tier, available to the rich, is private savings. In between, for people who do not have a hedge-fund account and yet want to retire on more than mere subsistence, there are pensions and 401(k)'s. Currently, more than half of all families have at least one member who has qualified for a pension at some point in his or her career and thus will be eligible for a benefit. And among current retirees, pensions are the second-biggest source of income, trailing only Social Security.
    From the beneficiary's standpoint, pensions mean unique security. The worker gets a guaranteed income, determined by the number of years of service and by his or her salary at retirement. And pensions don't run dry; workers (or their spouses) get them as long as they live. Because the employer is committed to paying a certain level of benefits, pensions are known as "defined benefit" plans. Since an individual's benefit rises with each year of service, the employer is supposed to sock money away, into a fund that it manages for all of its beneficiaries, every year. The point is that workers don't (or shouldn't) have to worry about how the benefit will get there; that's the employer's responsibility. Of course, the open-ended nature of the guarantee - the very feature that makes pensions so attractive to the individual - is precisely what has caused employers to rue the day they said yes. No profit-making enterprise can truly gauge its ability to meet such promises decades later.
    A 401(k), on the other hand, promises nothing. It's merely a license to defer taxes - an individual savings plan. The employer might contribute some money, which is why 401(k)'s are known as "defined contribution" plans. Or it might not. Even if the company does contribute, it offers no assurance that the money will be enough to retire on, nor does it get involved with managing the account; that's up to the worker. These disadvantages were, in the 90's, somehow perceived (with the help of exuberant marketing pitches by mutual-fund firms) to be advantages: 401(k)'s let workers manage their own assets; they were a road map to economic freedom.
    Post-bubble, the picture looks different. Various people have studied how investors perform in their 401(k)'s. According to Alicia Munnell, a pension expert at Boston College and previously a White House economist, pension funds over the long haul earn slightly more than the average 401(k) holder. Among the latter, those who do worse than average, of course, have no protection. Moreover, pensions typically annuitize - that is, they convert a worker's retirement assets into an annual stipend. They impose a budget, based on actuarial probabilities. This might seem a trivial service (some pensioners might not even realize that it is a service). But if you asked a 65-year-old man who lacked a pension but did have, say, $100,000 in savings, how much he could live on, he likely would not have the vaguest idea. The answer is $654 a month: this is the annuity that $100,000 would purchase in the private market. It is the amount (after deducting the annuity provider's costs and profit) that the average person could live on so as to exhaust his savings at the very moment that he draws his final breath.
  • Yahoo! message board post by "ibm20yrsnot40". Excerpt: Janet, Great work on the FAQ. This information is very helpful. One addition you should make for accuracy is the answer to Q18. In that answer you include the following:
    "One plan is the Supplemental Executive Retention Plan (SERP). While a regular employee in the PCF plan has to work 30 years to get a pension that pays about 30% of their salary, SERP pays an executive 66% no matter how long they have worked. Between the regular plan and the SERP plan, an executive who works for IBM for 30 years will get almost 100% of their salary when they retire! The Cooper Settlement agreement states that an individual's settlement amount will be offset by the amount they earn from the SERP. This means that most executives will not get anything from the Cooper Settlement"
    For accuracy you should note that the SERP has been discontinued and was closed to new participants effective May 1, 2004. While executives can still take advantage of EDCP there is currently no additional pension benefits available to them.
  • Forbes: IBM Boosts Buyback Plan by $4 Billion. Excerpt: International Business Machines Corp. said Tuesday it could use up to an additional $4 billion to buy back its own stock. In April, the computer giant authorized $5 billion in additional funds for use in its stock repurchase program. At Monday's closing price of $83.47, IBM would buy back about 48 million shares under the new authorization. The company has about 1.6 billion shares outstanding.
  • Yahoo! message board post by an IBM retiree. Full excerpt: I'm the other poster who called you a troll. Most of America's workers are currently in a battle for their financial lives. When any of us, active or retired, make statements the say they think these thefts are ok, I'll consider them trolls. Your statements are among the most insidious kind of corporate support when they indicate that we should do nothing to restore what was stolen but rather accept the situation and 'get another job' or some such.
    I put in my 30 years and earned my pension and medical coverage. In my case, the company that is stealing my money isn't even in real financial trouble. Just today they authorized $4 billion to repurchase stock. Most of which will ultimately be given out when executives exercise their options. If you are happy with how you have been treated by IBM, fine. However, as long as you or others like you try to persuade the rest of us to give up, I'll keep arguing back.
  • Wall Street Journal: Retirees File Suit Against Lucent Over Health Care. By Ellen E. Schultz. Excerpts: Retirees of Lucent Technologies Inc. filed suit, saying the company illegally overcharged an estimated 120,000 management retirees for their health coverage and terminated coverage for many retirees' spouses. The lawsuit, filed by three retirees in U.S. District Court in Newark, N.J., maintains that Lucent, of Murray Hill, N.J., violated Internal Revenue Service rules when it cut the retirees' health coverage. The rules state that when employers use the assets from the employees' pension plan to pay the employer's share of their retiree health-care costs, the employer can't subsequently cut the retirees' health benefits for five years. [...]
    Lucent transferred a total of $881 million from the management pension plan between 1999 and 2001, according to the suit. These types of transfers, called "Section 420 transfers" after the section of the IRS code that pertains to them, have been implemented by other large employers, including DuPont Co., which withdrew more than $1 billion from its U.S. pension plans for retiree medical costs between 1997 and 2000, and SBC Communications Inc., which withdrew $286 million from pension-plan assets in 2001 to pay for retiree health costs.
  • "2006 Medical Options" (for IBM retirees under the pre-FHA medical plan). By "choicer29yrs". Following are the numbers I just retrieved from the Netbenefits website for my family in the middle Tennessee area:
     
    Self
    Self + 1
    Self + 2
    IBM EPO – Empire
    $100.00
    $400.00
    $520.00
    IBM High Deductible PPO with HSA-Empire
    $75.00
    $301.00
    $391.00
    IBM High Deductible PPO – Empire
    $0.00
    $135.00
    $176.00
    IBM Med Deductible PPO – Empire
    $88.00
    $353.00
    $458.00
    IBM Low Deductible PPO – Empire
    $139.00
    $555.00
    $721.00
    Neither my wife nor I are Medicare eligible and I have 1 child to cover. Are these different for anyone else?
  • Yahoo! message board post by "bozemansmith". Full excerpt: Well -- it isn't all that great even if you do make it to early retirement. I did this year before I got pushed out and felt good about an FHA balance of just over 40K. Then the new IBM plan for coverage by the moderate deductible plan for me and my family is $1233 -- A MONTH!! Toss in another $120 for dental and eye care and you are looking at an annual amount of over $16,000. The FHA would last for about 2 1/2 years at that rate. (I have young kids and non-medicare wife).
    Fortunately, my spouse still has good coverage under her work plan (about an order of magnitude better than IBM's by the way), so I don't have to buy from IBM and can keep the FHA as "fallback" insurance if her job changes and that would afford us some "scramble" time. (While recognizing that the FHA will probably evaporate unexpectedly in the future too...)
    I haven't really shopped the market, but I am pretty certain that you can find better value coverage than that. So it is clear that IBM isn't really subsidizing squat -- the FHA illusion is just a fig leaf to cover an embarrassingly greedy move to recoup all those promised dollars of healthcare.
    What was the old Lily Tomlin joke when she played the telephone operator on Laugh In? "We don't care.....we don't have to." So they don't care -- and thanks to the lobbyists and a compliant Congress -- they don't have to.
  • Yahoo! message board post: "New (lack of) Medical Benefits - Retirees" by "Don". Full excerpt: I think this year, IBM has finally put on the proverbial straw to break the camels back. Those who retired from IBM before 1992 were "promised" (was posted on the bulletin boards) that they would never be affected by caps placed on future medical benefits. They were essentially "free". Of course, that promise was broken a few years back. What was more amazing, was when I went on Medicare. IBM was no longer on the hook for the full coverage (only 20%). The monthly deductions increased for less coverage (same plan, but IBM was only on the hook for 20% instead of 100%). Amazing! Last year they provided a "no monthly premium, limited prescription plan, with caps - fair enough), but their medical coverage went up even more. What was amazing was you could sign on with one of the insurers for $37/mo. via Medicare, IBM offered the same plan for $34/mo. with the same insurer. WOW!!! - a whole $3/mo. savings. Fortunately, we went with one Medicare Assigned plan, no monthly payment, with better coverage than the IBM plans for which you paid a monthly premium.
    This year, the IBM plans are atrocious. You can sign up for Medicare Assignment plans (at no (or little) cost) that are better than the IBM plans for which you pay through the nose for that 20% coverage. In addition, just to get prescription drug coverage by itself, costs more than many people spend on prescriptions - and you still make a copay.
    I thinks they have achieved their goal this year and that was to screw the retirees over once more for all their years of service and (for many - thousands of hours of unpaid overtime) and drive them out of the IBM plans. Guess, what, because of the cost savings on medical benefits, the top-level management will reward themselves with more options and million dollar raises for "saving the company so much money".
    I will never recommend any young person starting out to work for IBM as I did years ago. Let the cream of the crop work for someone else and let IBM get the dregs that it deserves. Of course, the constant lay-offs will help that cause. And, if there is a hell, lets hope that is where the CEOs and their cronies for the past 20 years end up.
  • Wall Street Journal: IBM General Counsel To Retire in January. By Charles Forelle. Excerpts: International Business Machines Corp.'s general counsel, Ed Lineen, will retire in January, the company said. Mr. Lineen, 64 years old, has been general counsel since 2002 and an IBM lawyer in various positions since 1970. "He has played a vital role in IBM's legal affairs, thoughtfully guiding our policies and strategies through important eras," IBM Chief Executive Samuel J. Palmisano said in a memo to employees today. IBM has been involved in a number of high-profile legal cases. It is a defendant in a giant lawsuit alleging age discrimination in its pension plan, and it is battling SCO Group Inc. over copyrights to some source code in the Linux operating system. Earlier this year, IBM settled a longstanding antitrust dispute with Microsoft Corp., in which Microsoft paid Big Blue $775 million.
    Donald J. Rosenberg, assistant general counsel and a 30-year IBM veteran, will replace Mr. Lineen as senior vice president and general counsel. IBM also named Bob Weber, an outside counsel for IBM at the firm Jones Day, to the new position of senior vice president, legal and regulatory affairs. He will report to Mr. Palmisano, and Mr. Rosenberg will report to him.
  • Jones Day Professional Biography: Robert C. Weber (Bob). Excerpts: Bob's litigation practice focuses on highly visible cases of signal importance to his clients. Most recently, Bob was lead trial counsel for IBM in the precedent setting trial of two plaintiffs in California state court in In re IBM San Jose Workers' Litigation. On February 26, 2004, after a trial of almost five months, the 12-person Santa Clara County jury returned a unanimous verdict for IBM. (Of the four cases put forward for early resolution by the court, two ended before trial in summary judgments for IBM and the other two ended in the defense verdict described above.)
    Bob has also served as lead counsel for R.J. Reynolds Tobacco Company in its smoking and health-related litigation. In the spring of 1999, he was lead defense counsel in the Ironworkers trial in federal court in Akron, a class action involving more than 100 union trust funds seeking over $2 billion in damages from various tobacco companies, and the first such action ever tried. On March 18, 1999, the jury entered a defense verdict on all counts. Bob was also lead trial counsel for RJR in the State of Minnesota action in 1998, which settled after four months of jury trial.
    Bob has extensive experience in complex civil litigation generally, including corporate derivative and governance litigation, federal and state enforcement actions, and consumer class actions. Along with the matters referenced above, Bob served as lead counsel for the Cleveland Browns in shareholder litigation and in connection with the move of the franchise to Baltimore, as well as defending the New England Patriots and team management against claims of sexual harassment brought by a female sports reporter. In another case that attracted national attention, Bob defended a local judge in a politically charged case involving alleged breaches of judicial ethics.
  • Computerworld: Dell sets up second development center in India. By John Ribeiro. Excerpt: The GDC in Bangalore is involved in the development and management of a variety of applications in the areas of e-commerce, manufacturing, inventory management and supply chain systems. The company didn't disclose the number of staffers that would be employed at its GDC in Hyderabad. The total staffing at the two GDCs in Bangalore and Hyderabad and a product group in Bangalore that designs and tests software for Dell's products is about 1,000, according to a source close to the situation who requested not to be named. Besides the GDCs and product development operations in India, Dell also employs about 7,000 staffers in India at three customer contact centers that offer voice and e-mail customer support and other services. During a visit to India in April, Kevin Rollins, president and CEO of Dell, told reporters in Bangalore that the company plans to increase staff at its contact centers and software development operations in India to 10,000 by the end of this year.
  • Yahoo! message board post by "catmandu4". Full excerpt: Talked to a retiree yesterday and he said he got a letter from POOR IBM saying how expensive his medical benefits were and IBM was DROPPING his inefficient and over priced (he said that was almost word for word) HMO so he would have to find his 4th new one in 5 years. Last year he said the HMO he had in 2003 told him IBM tried to get them to cut their price by 30% (ask IBM to do that on an iseries or pseries box) and they told IBM to take a hike. It scares the hell out of me. Both my wife and I have some medical issues and it looks like all that fine planning Jet and Duck told me to do will be spent on getting medical coverage via the company I have given 34 years to.... Thanks Sam and team. I hope you are very very proud!!!!
  • Associated Press, courtesy of Cleveland.com: Pensions bill still on the table but not moving. By Jim Abrams. Excerpt: The PBGC now operates on premiums and investments, but it could be forced to turn to the Treasury for a bailout if its deficits grow too large. Current pension rules, under which some companies have gone years without contributing to their plans, "represent some of the most irresponsible public policy I've seen during my time in Congress," Boehner said.
  • St Petersburg Times (courtesy of Janet Krueger in a Yahoo! message board post): Compounding the pension crisis. Excerpts: Let's play pretend. Imagine for a moment that Congress is competent and cares about the financial security of Americans, especially those nearing retirement. In that fantasy scenario, the House and Senate would be working feverishly to fix the nation's overburdened pension system, so that promised benefits would be there when needed. In the real world, Congress is working feverishly on pension law, but not to fix the problems. Instead, under the influence of powerful corporate and union interests, lawmakers are making sure no reform occurs. That way it is easier for managers and union leaders to promise more in benefits than they can deliver.
    The concept of reform is simple - make companies that offer defined-benefit pensions fund them adequately, and raise insurance premiums so that the government-backed Pension Benefit Guaranty Corp. remains solvent. PBGC protects the pensions of nearly 45-million workers and retirees, but has run into financial difficulty itself because of large failures in the airline industry. If private pension funds don't cover the PBGC's current $23-billion deficit, then taxpayers will have to.
    None of that has given Congress a sense of urgency. Pension legislation moving slowly through the Senate got snagged on a single measure: the requirement that companies with lower credit ratings pay higher insurance premiums. The assumption is that they are more likely to default on their pension obligations. Sounds reasonable, but some powerful corporate and union interests didn't like it and prevailed on Sens. Mike DeWine, R-Ohio, and Barbara Mikulski, D-Md., to freeze the bill.
  • Washington Post: Motown's Ominous Message. By Sebastian Mallaby. Excerpts: Companies provide benefits nonetheless because government encourages them to do so. Historically, it did this by imposing wage controls, forcing employers to find non-wage carrots to lure workers. More recently, government has pushed the same way by sheltering pension contributions and health premiums from taxes. The resulting company-based welfare system is widely accepted as the way things ought to be. But it's based on a myth of lifetime employment at one firm. And its tax breaks are unfair to self-employed workers who don't get them.
    Why did carmakers get to the point where they not only offer pensions and health care, but where these benefits account for the majority of workers' total compensation? Again, the answer has to do with government. The law allows firms to reward workers with valuable benefit promises today, but pay for these promises later. In the car industry, just as in other industries facing a cash crunch, this promise-now, pay-later option has proved irresistible.
    The option is clearest in the case of retiree health benefits. The law allows companies to promise health coverage to workers when they retire, but it fails to require them to set aside cash to pay for that obligation. So in bargaining sessions over the years, Detroit's managers and unions have found it easier to make "progress" on health plans rather than on wages that would have to be paid for immediately. For managers, cost-free promises of gold-plated health coverage in the far future bought labor peace. For labor leaders, they impressed rank-and-file members and ensured reelection.
  • New York Times: Wal-Mart Memo Suggests Ways to Cut Employee Benefit Costs. By Steven Greenhouse and Michael Barbaro. Excerpts: An internal memo sent to Wal-Mart's board of directors proposes numerous ways to hold down spending on health care and other benefits while seeking to minimize damage to the retailer's reputation. Among the recommendations are hiring more part-time workers and discouraging unhealthy people from working at Wal-Mart. In the memorandum, M. Susan Chambers, Wal-Mart's executive vice president for benefits, also recommends reducing 401(k) contributions and wooing younger, and presumably healthier, workers by offering education benefits. The memo voices concern that workers with seven years' seniority earn more than workers with one year's seniority, but are no more productive. To discourage unhealthy job applicants, Ms. Chambers suggests that Wal-Mart arrange for "all jobs to include some physical activity (e.g., all cashiers do some cart-gathering)." [...]
    The memo, prepared with the help of McKinsey & Company, said the board was to consider the recommendations in November. But the memo said that three top Wal-Mart officials - its chief financial officer, its top human relations executive and its executive vice president for legal and corporate affairs - had "received the recommendations enthusiastically." Ms. Chambers's memo voiced concern that workers were staying with the company longer, pushing up wage costs, although she stopped short of calling for efforts to push out more senior workers. She wrote that "the cost of an associate with seven years of tenure is almost 55 percent more than the cost of an associate with one year of tenure, yet there is no difference in his or her productivity. Moreover, because we pay an associate more in salary and benefits as his or her tenure increases, we are pricing that associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart."
  • Los Angeles Times: Wal-Mart's Memo Blurs Its Message on Benefits. As the retailer vows to widen coverage, the document suggests 'bold steps' to cut health costs. By Abigail Goldman and Lisa Girion. Excerpts: Wal-Mart Stores Inc., which built its reputation — and a virulent opposition — on rock-bottom prices, has talked a lot lately about becoming a kinder, more responsible company. But the retailing giant is finding that convincing the world that it is "committed to change," and to keeping costs low, is a tough balancing act.
    On Monday, Chief Executive H. Lee Scott Jr. pledged to bring health insurance within reach of his 1.3 million U.S. employees. On Wednesday, a leaked company memo revealed "bold steps" to reign in Wal-Mart's employee benefit costs. Among the recommendations: using more part-time workers, cutting life-insurance payouts, pushing spouses off health plans through higher premiums and trying to dissuade unhealthy people from seeking jobs by, among other things, requiring cashiers to gather carts in Wal-Mart's vast parking lots.
    To some Wal-Mart watchers, the difference between what Wal-Mart says and what Wal-Mart does makes perfect sense. "I don't think the DNA of Wal-Mart has changed at all," said HSBC Securities analyst Mark Husson, returning Wednesday from an analyst meeting at Wal-Mart headquarters in Bentonville, Ark. "It's like a religious cult — it has a low-cost gospel to bring to the country and sees it as a divine duty to do that and nothing is going to get in its way. It will do what it has to do and say what it needs to say to get there."
  • New York Times: Congress Weighs Big Cuts to Medicaid and Medicare. By Robert Pear. Excerpts: Representative Nathan Deal, Republican of Georgia, said, "If people have a personal stake in the cost of their health care, they will use it more responsibly." But Representative Tammy Baldwin, Democrat of Wisconsin, said, "Higher co-payments will lead people to forgo needed medical care." "To listen to some of the personal responsibility arguments," Ms. Baldwin said, "one might think that people line up to see their doctors the way they line up to see a rock concert or sporting event, and the only way to control this irrational hunger or thirst for medical care is to make it more expensive. I just don't buy that."
  • New York Times: For a Retainer, Lavish Care by 'Boutique Doctors'. By Abigail Zuger. Excerpts: And second, Mrs. Lipson's internist back home in Florida is Dr. Bernard Kaminetsky, one of a new breed of "concierge" or "boutique" doctors who, in exchange for a yearly cash retainer, lavish time, phone calls and attention on patients, using the latest in electronic communications to streamline their care. Since its debut in 1996, concierge medicine has evoked criticism from many corners. Some ethicists say it is exacerbating the inequities in American health care. Insurance regulators have raised concerns about fraud. Government watchdogs, worried that it threatens the tenuous equilibrium of the health care system, are keeping an eye on trends. [...]
    "Concierge care is like a new country club for the rich," Representative Pete Stark, Democrat of California, said at a joint economic committee hearing in Congress last year. "The danger is that if a large number of doctors choose to open up these types of practices, the health care system will become even more inequitable than it is today." [...]
    Anyone searching the country for a group of patients who are perfectly happy with their medical care, neither brutalized by the system nor fearful that the onset of a serious illness will plunge them into a morass of confusion and neglect, need look no farther than Dr. Kaminetsky's waiting room here in Boca Raton. Not that the waiting room usually has anyone in it. One promise made to patients paying for concierge service is that waiting will not be a part of their health care experience. Patients are guaranteed that phone calls will be returned promptly, appointments will be scheduled on a same-day basis if necessary, and appointment times will be honored. A bowl of fruit salad and platters of bagels and sponge cake set out for patients in the waiting room can go barely touched over the course of a day, and the television often plays to an empty couch.
  • New York Times: Stalking the Poor to Soothe the Affluent. Excerpts: The proposals would have the federal government - supposedly the protector of the neediest - give the states broad leeway to restrict current benefits; to require co-payments by the poor for medicine and for care by doctors and emergency rooms; and to cut preventive care for children, who represent half of the Medicaid roll. The food stamp program would probably also be hit with a $1 billion cut, and even welfare payments to elderly people who are sick would be crimped by using federal bookkeeping tricks. One particularly boneheaded proposal would severely cut the funds for child support enforcement by $4 billion. This program currently returns $4 in benefits from natural parents for every dollar invested.
    The proposals are so appalling that moderate Republicans are even said to be considering a show of life on the floor. In contrast, Senate Republicans are shaping cuts that would spare the poor's Medicaid and other safety nets, while finding savings in Medicare overpayments. The Senate approach is obviously preferable, but it is also rooted in the G.O.P.'s pre-election fiction that overspending is the basic problem. The tax cuts should be scuttled and the poor protected.
  • TomPaine.commonsense: Open Season On America's Seniors. By Robert M. Hayes. Excerpts: Deer hunting season is just starting up in much of the northern United States. But the Bush administration has already declared open season on 43 million Americans who depend on Medicare, as the drug and insurance industries join the Medicare prescription drug gold rush. The pharmaceutical industry stands to gain $139 billion in profits from the prescription drug benefit. And the nation’s giant insurance companies are putting hundreds of millions of dollars into marketing campaigns to snag bewildered consumers into their private drug plans, subsidized by taxpayers.
    Starting January 1, 2006, Medicare will offer limited prescription drug coverage to Americans age 65 and over and to younger Americans with serious and prolonged disabilities. That should be a good thing. Medicare, the best national health care system in our nation’s history, has lacked prescription drug coverage for far too long. But the overdue response to a great national need—yes, older Americans routinely suffer and die in this country for lack of affordable medicine—has been corrupted into a profit-seeking feeding frenzy that will enrich powerful supporters of the Bush administration and leave millions of people with Medicare paralyzed like deer in headlights. [...]
    In many parts of the country, people with Medicare—including the oldest, frailest and most disabled—will face upward of 40 competing drug plans. Each plan will have varying deductibles and premiums; differing and ever-changing lists of covered drugs; an array of co-payments for different prescriptions; special requirements to be met before certain drugs will be covered; and pharmacy networks that may or may not include an individual’s favorite neighborhood pharmacy. Few of the men and women confronting this crazy-quilt menu of drug plans have the expertise needed to navigate the web of trapdoors contained in the competing plans. Many are cognitively impaired, homebound or living in nursing homes or suffering from chronic illnesses—both physical and mental. Sure, some people with Medicare are sophisticated and healthy. But even experts are uncertain how to assist people in making informed decisions on whether to enroll in the benefit and, once that decision is made, which of the scores of plan options is the best bet to cover the medicines they may need by year’s end. [...]
    Advertisements in the mail will be misleading enough. But even worse, the Bush administration—under heavy lobbying from insurance companies sponsoring the Medicare drug plans—earlier this year authorized telemarketing of these complex insurance products. Salespeople working for the insurers are allowed to call people with Medicare at home between 8 a.m. and 9 p.m. Think about how straightforward and educational those conversations will be for our parents and grandparents. Such marketing is not illegal. The Centers for Medicare and Medicaid Services, the federal agency that runs Medicare, has endorsed the system. And it gets worse. Like the profiteering insurers, the federal government is telling untruths and half truths about the drug program—sometimes by design, sometimes by human error. The Bush administration spent millions of taxpayer dollars to distribute an insert in Parade magazine that ran in hundreds of Sunday newspapers across the country in mid-October. The insert was supposed to describe, in an educational and fair way, the Medicare drug benefit.
    However—whoops!—the government insert neglected to mention the "doughnut hole"—a nearly $3,000 gap in coverage when people will have to keep paying plan premiums but will receive no assistance paying for their medicine. That makes the government’s promotion propaganda, not education. But hey, there’s money to be made. And then there is the mailing of 43 million copies of CMS's annual handbook, Medicare & You. It contained a huge error: The handbook incorrectly stated that low-income people can sign up for any drug plan without paying unaffordable premiums. This particular mishap appears to be an error, not deliberate fraud. Still, people will be hurt if they rely on the handbook’s advice. In the months ahead, commission-based insurance brokers will be driving the national campaign to enroll people in the competing drug plans. Of course, they will have every financial incentive to maximize enrollment in the plan they are selling. They will have very little incentive to help consumers make good choices from the array of confusing benefit options.
  • The Register (United Kingdom): Age discrimination rife in UK. Old timers get raw deal. Excerpts: Age discrimination is widespread in UK organisations and many workers hold unrealistic perceptions about their own career prospects, according to new research by the Chartered Institute of Personnel and Development (CIPD). New Regulations will ban age discrimination in recruitment, promotion, training and the provision of benefits from October 2006. Companies wanting to set a retirement age of anything less than 65 will need to justify it objectively, and today's upper age limit for unfair dismissal and redundancy rights will be abolished. The results of the CIPD survey, undertaken together with the Chartered Management Institute among 2682 managers and personnel professionals, show that age discrimination persists in many organisations. Six in ten respondents (59 per cent) reported that they have been personally disadvantaged at work because of their age and nearly a quarter of those surveyed (22 per cent) admitted that age has an impact on their own recruitment decisions.
  • The Register (United Kingdom): Intel's Xeon chip kill is result of chaos in India. Excerpts: While stunning in its own right, Intel's cancellation this week of the multicore "Whitefield" processor stands as a more significant miscue that simply excising a chip from a roadmap. Whitfield's disappearance is a blow to India's growing IT endeavors. Originally discovered by The Register, Whitefield stood as a major breakthrough for Intel and its Indian engineers. The much-ballyhooed chip would combine up to four mobile processor cores and arrive in 2007 as the very first chip designed from the ground up in India. In the end, engineering delays and a financial audit scandal killed the processor, leaving Intel to develop the "Tigerton" replacement chip here and in Israel. [...]
    Whitefield had been meant to serve as Intel's most sophisticated response to the rising multicore and performance per watt movements. The company has fallen well behind rivals IBM and Sun Microsystems on such fronts in the high-end server market and behind AMD in the more mainstream x86 chip market. The Whitefield chip was designed to give these competitors a real run for their money as it made use of Intel's strong mobile chip technology to deliver a high-performing product with relatively low power consumption. Instead of wowing customers, Intel has disappointed them and created a painful situation for its India staff.
  • Money Magazine: Today's lesson: Starting over mid-career She quit a six-figure job to teach public school. But can her family get by on a third the income? Excerpts: When she was a sales executive at IBM, Susana Temprano used to wake up at 6:30 a.m., drive into midtown Manhattan from her home in River Vale, N.J., blaze through e-mails and conference calls, meet with customers and, after work, entertain clients in New York City's finest restaurants. Counting bonuses and commissions, her income topped $200,000 a year.
    Nowadays, Temprano rises at 5 a.m. and drives to gritty upper Manhattan, far from the city's office towers and swank restaurants. She arrives at Public School 18, where she teaches math in English and Spanish to 90 middle schoolers. She lunches at her desk, tutors kids after school, stays up until midnight grading papers and by Friday is so tired she sometimes falls asleep at the dinner table. Now in her second year as a teacher, she makes less than $40,000.
    But Temprano, 43, has no regrets. "I didn't think I was using all my skills," she says of her 20-year career at IBM. "It had become just a job. Now I sing on my way to work." [...] When Temprano announced her plans two years ago, reactions ranged from incredulity (her office) to shock (her family). One colleague took her out for a two-hour lunch to try to talk her out of it. No way. "They could have given me $1 million and I wouldn't have stayed," Temprano says. [...]
    Fernandez (Ms. Temprano's husband) blanched at the financial challenge also but says he "saw how miserable she was at IBM." Besides, Temprano had no intention of putting her career choice to a family vote. [...] "I love my job enough to teach till I'm 90," Temprano says. "But I don't want to have to work till then."
  • Ampex VRX-1000 Nostalgia! Alice Hill's Real Tech News: Ampex VRX-1000 - The First Commercial Videotape Recorder. Excerpt: Take a look at this behemoth whenever you think technology is moving too slowly. What I didn’t realize is that the VCR dated back to the 1950’s, but sure enough, the very fist model made its debut in 1951 priced at a reasonable $50,000 with a recording time of 16 minutes per tape.

Vault Message Board Posts
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. The following are a few sample posts:
  • "My thoughts" by "amorphous_human". Excerpt: Said another way, the amount of variability across practice areas within a firm does not have nearly the amount of standard deviation required to get sufficiently away from the mean to put you in positive territory. In case you are new to this board, the mean is virtually no raises, no bonuses, ridiculously high utilization targets, mega-bureaucracy, oversold underskilled projects, high turnover, no training, no career track and no promotions. The SAP practice has all of those.
    The reputation has been catching up to the reality for the past few years. There are a few good partners and PMs, but they are by and large miserable. In fact everyone is miserable but me. I am the only happy employee in IBM because my practice thrives and runs by itself freeing me to spend most of my day on the vault board helping people avoid making the horrible mistake of coming to work for IBM. If the company is a bad choice, and it is, then any practice within that company is also a bad choice. Here is how I would rank the firms and as a result the practices: - ACN, Deloitte, CAP, McDonalds, Burger King, Walmart, McKinsey, BCS.
  • "Ignore all others" by "amorphous_human". Excerpt: Ignore all other answers posted, they are incorrect. I am the only one you can count on to give correct answers. We are desperately short of SAP staff, are hiring aggressively, and paying well. Unfortunately we are not hiring nearly as fast as staff are leaving. "Leadership" hasn't figured out that it is cheaper and better to retain existing staff rather than trying to replace them. We have sold a ton of SAP work we cannot staff, and staff already on work are leaving in droves. Ask for top dollar. And don't negotiate with HR, they don't control the pursestrings and are clueless. Negotiate directly with a partner whose practice is hiring.

New on the Alliance@IBM Site:
  • Alliance@IBM: Attention IBM employees: IBM is blocking e-mail to and from the Alliance@IBM e-mail address endicottalliance@stny.rr.com from inside the company. Please send your job cut information and other correspondence from your home e-mail. You can also contact us the following ways: Phone 607 658 9285 or Fax 607 658 9283.
  • IBM Pension Lawsuit FAQ about Cooper v IBM. Updated 10-22-05. By Janet Krueger. Excerpt: Below is a list of frequently asked questions about the class action lawsuit against IBM's 1995 and 1999 pension plans. The answers are my personal opinions, have not been verified with either IBM or plaintiffs’ counsel, and should not be construed as legal advice. On July 31, 2003, a federal district court judge ruled in favor of the employees in this case. On September 28, 2004, IBM and the legal team on Cooper v IBM announced that an agreement had been negotiated that settles some of the claims and set the amount of damages that IBM will pay to the class if IBM's appeal of the district court's age discrimination rulings is unsuccessful. On August 16, 2005, after the August 8 fairness hearing, Judge Murphy issued an order finalizing the settlement agreement. On August 30, 2005, IBM began the appeals process by issuing their notice of appeal.
  • From the Visitor's comment page:
    • Comment 10/24/05: Oh, and remember that medical savings account they start putting money in at age 40-55 for new plan folks? They have a nice clause that says if you are terminated or leave IBM before age 55 you lose that money. Certainly works in favor of Big Blue when resource action time comes around. And they say they don't discriminate against older folks. Again in my department of 5 layoffs last round in 2003 I was the youngest at age 42. You do the math. Great company! -Anonymous-
    • Comment 10/24/05: The new cash balance plan just plain sucks! I was 39 4 years ago when they cut it off at age 40 to stay on the old plan. A few years later I was laid off after 17 years of service at age 42. Guess what! My cash balance plan amounted to $47K. Not quite a years salary as a technician at the burlington site. Shame on IBM. Shame on me. There is life after IBM and they really put the wet noodle to the folks on the old plan who had no choice under the age of 40 with significant time with the company. They did me a favor laying me off. -Anonymous-
    • Comment 10/27/05: Did you get a raise last year? What are you going to do about it? Please join the union to allow a collective voice to take action for what you earned. IBM has not provided raises to about half their employees for the last five years. At the same time IBM has provided 4 billion dollars a year to buy back stock. This is about four times what IBM provides it employees each year in raises. This stock buy back artificially and only temporarily increases IBM stock price. About two thirds of IBM executive compensation is from IBM stock. IBM just announced another four billion dollars is to be spent to buy back IBM stock. What action are you going to take for yourself and your IBM colleagues to allow salary increases for the many IBM employees that will not get one? Please join the union. Over half IBM would be union members and have a collective voice if every IBM employee who did not get a salary increase joined the union. Join now before you leave this web site. A collective voice and fairness will not happen without your support and action. -Anonymous-
    • Comment 10/27/05: I like many people here have not received a raise in 3 years. (Even though job responsibilities have been very progressive). The fact that I took two band 8 people's jobs and was not given a raise or promotion is enough in itself to make me leave this company. A good friend of mine who is a controller told me flat out he was told that he could not give anything out except to "1" performers. I am in the finance community and can tell you right now the bottom line is that Sam sets financial targets that are unrealistic and way too aggressive. All this does is drive morale in the ground, and produce more layoffs. I can tell you 1st hand that 2006 is not looking good, (internally) and we can expect the same type of actions next year. -Anonymous-
    • Comment 10/28/05: We have been notified in the UK that 2 accounts that were offshored to Bangalore earlier this year (NTL and Astra Zeneca) are coming back to the UK but are to be subcontracted out to a 3rd party (Adecco) to manage. This is due to poor customer satisfaction. -Anonymous-

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