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    Highlights—August 19, 2006

  • Wall Street Journal: What You Need To Know About Pension Changes. New Law and Court Ruling Mean More Companies May Convert Plans to 'Cash Balance' Mode. By Ellen E. Schultz and Theo Francis. Excerpts: If you're covered by a traditional pension plan, the odds that your employer will change to a "cash balance" pension plan have just increased. These new-style pensions, which currently cover roughly a quarter of the 22 million private-sector workers with pensions, have been controversial because switching to them reduces pensions for older workers -- sometimes significantly. This has led to lawsuits and proposed legislation to slow their spread, causing some employers to hesitate about changing.
    But last week, a federal appeals court ruled that International Business Machines Corp.'s cash-balance pension didn't violate age-discrimination laws. Just days before that, Congress approved a measure that would deem cash-balance plans legal. While the ruling will be appealed, and the bill has yet to be signed into law by President Bush, employer groups say the recent actions are a green light for employers to change their pensions.
    For employers, switching to a cash-balance pension plan reduces future payouts and boosts earnings. That, in turn, can result in big gains in executive incentive pay, which is tied to earnings.
    Researchers at Cornell University, the University of Colorado at Boulder and the University of California at Irvine examined hundreds of companies that converted their pensions to a cash-balance formula, and they found that the average incentive compensation for the chief executive officers jumped to about four times salary in the year of the pension cut, from about three times salary the year before. Companies that didn't change their pensions saw little change, says Julia D'Souza, a Cornell associate professor of accounting and lead author of the study, which is currently under review by an accounting journal. [...]
    The bottom line is that companies can boost their profits by converting to cash-balance plans and now face little legal risk in doing so. Unless you have already retired -- in which case your pension won't change -- here's what it may mean for you: [...]
    Why do employers change to cash-balance plans? Companies can save money and boost profits. If a company has a pension surplus (most that converted in the 1990s did, and some that are converting today do), it can use the surplus assets to "fund" the contributions to workers -- offering the company a cash savings for a 401(k)-like benefit that it wouldn't have if it actually switched to a 401(k). What's more, changing to a cash-balance plan reduces pensions, and thus a company's pension obligation. Under accounting rules, companies calculate how much they expect to pay out in pensions over the lives of their employees -- including amounts workers haven't earned yet -- and then reflect that amount as a liability on their books. When the pensions are cut, the estimated amounts that will no longer be paid out instead get added to income. [...]
    Are cash-balance plans better for younger workers and job-hoppers? Employers say cash-balance pension plans are better for younger and more mobile workers because these workers can build up a better benefit than under traditional pensions, and take it with them when they leave. But last year, the Government Accountability Office concluded that most workers -- regardless of age -- get lower retirement benefits when employers switch from traditional pension plans to cash-balance plans. [...]
    Remember, your employer can still cut a cash-balance pension. In coming years, it can reduce the annual pay credit, or even freeze the plan. (Sears Holdings Corp. and Verizon Communications Inc. froze their cash-balance plans this year, and IBM announced it will freeze its plan at the end of 2007.) So you need to save as much as you can in a 401(k) account or elsewhere. Cash-balance plans could be even riskier going forward, because the new pension law would allow companies to use an interest crediting rate that could turn negative, potentially wiping out all the interest credits previously earned.
News and Opinion Concerning U.S. Court of Appeal's Overturn of Cooper v. IBM Decision
  • National Public Radio: IBM Wins Case Involving Pension Change. By Wendy Kaufman. Excerpt: A federal appeals court ruled earlier this week that IBM did not discriminate against older workers when it changed its pension coverage in the 1990s. The case involved 140,000 older employees who were affected when IBM converted to a "cash-balance" pension plan.
  • Littler Mendelson's Benefits Practice Group: Cash Balance Comeback - New Opportunities for Employers in Wake of Court Decision and New Legislation. By Steven J. Friedman. Excerpts: For these reasons, employers have been, in a fairly robust manner, converting their traditional pension plans to alternative plan designs, such as cash balance plans and pension equity plans. However, in 2003, a ruling out of the District Court for the Southern District of Illinois put a halt to this robust migration to cash balance plans. Specifically, the court held in Cooper v. IBM that the benefits provided under IBM's cash balance plan discriminated against older workers. The holding also implicated pension equity plans. This caused many employee benefits professionals to question whether cash balance (and pension equity) plans were legally viable alternatives to traditional plans. Two very recent developments have now bolstered the legal alternatives to traditional plans. Two very recent developments have now bolstered the legal viability of these types of plans.
    IBM Decision Reversed: Employers feared that Cooper would spell the end of cash balance and pension equity plans when employers were seeking a means to provide alternatives to traditional pension plans. On appeal, however, the Court of Appeals for the Seventh Circuit reversed the district court and found that the structure of IBM's plan was not discriminatory. The court stated that the district court improperly treated the time value of money as age discrimination. The court held that benefit accruals under IBM's cash balance plan should be measured by looking at the amount of the employer's contributions (which were clearly age neutral) rather than the value of such contributions after they have accrued earnings from the date of the contribution through the plan's retirement date. Accordingly, as long as an employer provides credits which are uniform percentages of pay to all participants, the Code and ERISA prohibitions against not reducing accruals to a participant on account of his or her age would not be violated.
    Pension Protection Act Also Boosts Cash Balance Plans: The Pension Protection Act, passed by Congress on August 3 and signed into law on August 17, 2006, provides that "hybrid" plans, which are account-based defined benefit plans, such as cash balance (and pension equity) plans are not discriminatory so long as participant's accrued benefit, determined as of any date, is greater than or equal to that accrued by a similarly situated, younger participant. Accordingly, this new legislation explicitly approves typical cash balance and pension equity plan designs.
News and Opinion Concerning the Pension Reform Bill
  • Fort Worth Star-Telegram: No pension worries - at least for execs. By Mitch Schnurman. Excerpts: Traditional pensions have been fading away for almost 25 years, and last week's pension bill is likely to speed along their demise.
    Except for the executive class.
    It seems almost a law of nature that CEOs will get theirs regardless of changes in tax laws, securities regulations and public disclosure. Executives have been racking up millions in guaranteed retirement money in the past few years even while a growing number of companies froze or terminated their pensions. [...]
    Supplemental retirement plans, in particular, allow companies to pay out much higher sums and shift the tax burden to the corporation, making them even more attractive to executives. The researchers cite examples including Robert Nardelli, who joined Home Depot in December 2000. Three years into his tenure, Nardelli was eligible for retirement payments of $3.25 million a year beginning at age 62. If he leaves the company then, he will get $4 million in retirement money for every year he worked there, the report says -- and that assumes no increase in salary or bonuses.
    It used to be ailing companies that gave up their pensions. But in the past few years, 17 large, financially healthy companies have frozen their plans, including IBM, Verizon, Hewlett-Packard and Alcoa. They say the programs are too expensive and the costs too uncertain, and like most other companies, they have shifted their focus to defined-contribution plans like 401(k)s. Those cost about half as much, and the expense is predictable because the plans are not tied to stock-market performance or changes in life expectancy. [...]
    But traditional pensions pay out much more, especially to those in middle age, and they provide a stable alternative to market returns. Executives understand their appeal, which is why their supplemental plans are usually structured as pensions, based on their final salary and years of service. Union leaders have always valued them highly, too, and many workers realize what they stand to lose when their plan ends.
    Pensions, like most employer-benefit programs, used to be guided by a great democratizing principle: What was good for the boss was good for the little guy, too. That notion flourished in the 1970s, when a CEO earned 40 times more than the average worker. Today, with the pay multiple closer to 400, the connection is slipping away.
  • U.S. News and World Report: Retirement: Mixed views on pension legislation. By Emily Brandon. Excerpt: But Bradley Belt, former executive director of the Pension Benefit Guaranty Corporation, stressed what the new legislation would not do. "It's not going to save the defined-benefit system," Belt said at the eighth-annual conference of the Retirement Research Consortium. "It was not an explicit goal of the administration. It will not insure against future loss of benefits under defined-benefit plans. It will not in itself ensure financial security." He also said it would not restore the PGBC to financial solvency but acknowledged that it would be a modest improvement to current law.
  • Dallas Morning News: Pension legislation puts the workers in control. By Pamela Yip. Excerpts: The intention is to improve the health of corporate pensions, which have suffered low investment returns thanks to the bursting of the stock market bubble and low interest rates. However, experts say that the bill also will speed the disappearance of traditional pension plans because companies will find them much more expensive to keep up.
    "It's going to probably dampen what remaining employer support there is for defined-benefit plans," said Norman Stein, a law professor at the University of Alabama and an expert in pension law. Those that keep defined-benefit plans are expected to move toward cash-balance plans. The pension legislation created a legal framework to convert traditional pensions into cash-balance plans.
    "The floodgates are open," said Janet Krueger, spokeswoman for a group of current and former employees who challenged IBM's cash-balance plan. "Other people are going to be converting."
    Shortly after the pension bill passed Congress, a federal appeals court ruled that IBM didn't commit age discrimination when it converted to a cash-balance plan. The ruling "definitely will help a lot of companies which were waiting for clarity from both the courts and Congress," said James A. Klein, president of the American Benefits Council, which represents employers. "In a matter of a few days, both the courts and Congress have confirmed that these plans are legitimate, non-age-discriminatory plans, so the efforts to convert can resume."
  • Kiplinger's Personal Finance Magazine: The death of the retirement safety net. Americans are quickly losing retirement security as companies stop offering pension plans. Here's what you can do to patch together a retirement that's just as safe. Excerpts: Pension checks may one day be relegated to museum exhibits along with buggy whips, telegrams and other artifacts of days gone by. The number of employers offering so-called defined-benefit plans peaked in the mid 1980s, when pensions covered one out of three private-sector workers in the U.S. By the end of 2003, pension coverage had slipped to less than one in five. [...]
    And within the past year, even well-funded pension plans sponsored by healthy, profitable companies have taken a T. rex-sized step closer to extinction. Some of the biggest names in corporate America -- many known for offering the richest benefits ---- have backed away from making any further pension promises to employees. General Motors, IBM, Lockheed Martin, Motorola, Sprint Nextel and Verizon are among those that have "frozen" their plans. [...]
    Most companies that are altering their pension plans are either implementing a "soft freeze" or a "hard freeze." A soft freeze is what IBM put into place in early 2005 when it closed the plan to all new hires. Existing employees continued to accrue benefits. In January 2006, IBM turned down the temperature another notch, moving from a soft freeze to a hard freeze. As of 2008, there will be no further benefit accruals in the pension plan, but all benefits earned as of that date will be preserved. IBM's 125,000 current retirees, former employees with vested benefits and employees who retire prior to 2008 will not be affected.
  • Detroit News: Execs wage class war against serfs. By Froma Harrop. Excerpts: "As Workers' Pensions Wither, Those for Executives Flourish: Companies Run Up Big IOUs, Mostly Obscured, to Grant Bosses a Lucrative Benefit." This headline comes to us not from the communist Daily Worker but the orderly pages of the Wall Street Journal, the chronicler of capitalism -- or, as it used to market itself, "The Daily Diary of the American Dream."
    It's not news that American executives have put ordinary workers' benefits on a diet while they go for a fourth helping. What makes this redistribution of corporate wealth special is its brazen and unblushing quality. We are not talking here about some stock option deal where the top guys are rewarded for increasing shareholder value. In this case, the money gushing into the executive suite is simply being siphoned through holes drilled in the workers' paychecks. Here's an example, courtesy of the Wall Street Journal:
    General Motors has long complained that its "legacy costs" have made the automaker dangerously uncompetitive. By "legacy costs" it means the health benefits and pensions that it promised its workers and retirees. In an effort to ease those "burdens," GM recently announced it would end pensions for 42,000 of its salaried employees.
    But guess what the Journal discovered. It found that the fund for those middle-class pensions was actually bulging with $9 billion more than was needed to honor them. The real problem, it turns out, was GM's executive pensions, which management had been supersizing even as it demanded cuts from the lower-downs. GM's executive-pension obligations, we learn, are $1.4 billion.
    General Motors is not the only company to have built up extravagant pension deals for the privileged few. Executive-pension liabilities have hit $3.5 billion at General Electric, $1.8 billion at AT&T and $1.3 billion at Exxon Mobil and at IBM. "Sometimes a company's obligation for a single executive's pension approaches $100 million," the Journal reports. [...]
    It's painful to observe a growing serf mentality among ordinary Americans. Working folk seem afraid to complain about greedy executives or tax cuts for the rich, lest some big-money politician accuse them of waging "class warfare." They fall sway to right-wingers on the radio, who tell them to get on their hands and knees and thank Wilbur Ross for giving them a job. Workers should understand that this doesn't have to be. The rules of this unfair game are made in Washington. And until they change the rule makers, nothing will get better for them.
  • MSN Money: Money doesn't buy happiness in retirement. Your health and your savings are important, but they aren't the defining factors. It's whether retiring was your own decision -- or if you were forced out early. By Liz Pulliam Weston. Excerpts: "The biggest impact on how satisfied people were with their retirements … was whether they wanted to retire at the time they did," said Keith Bender, a University of Wisconsin economics professor and the study's co-author. The "voluntariness" of retirement "plays a big role, even after controlling for other factors like income."
    Being forced out of the workplace before you're ready is, unfortunately, a reality many of us are likely to face. A full 40% of the retirees polled by the Employee Benefit Research Institute in 2003 had to retire before they'd anticipated. What usually ushers people out the door prematurely are health problems and layoffs. A full 41% of those polled by EBRI who said they retired earlier than planned did so because of illness or disability, said EBRI Chief Executive Dallas Salisbury. Another 34% cited changes at work, including downsizing and closures. Early retirement, planned or unplanned, is actually the norm. Half of all workers retire by age 62, according to the Social Security Administration, and fully 72% receive reduced benefits because they retired before age 65.
  • Yahoo! message board post by "ctman1452". Full excerpt: The above statement summarizes the most egregious and long term damage Lou did to IBM. He changed the culture from a shared one between mgt. and labor in both good and not so good times to one of WIN/LOSE no matter what the conditions were.
    So now you have a culture where you have divided the company and put one group against the other with execs over incented to "extract" their perks from active and retired employees instead of advancing the basic business deliverables with the customer understandably getting very mixed results in the interplay. Who is going to believe in leadership that is asking you to sacrifice so they can benefit at your expense with any enthusiasm? A formula for mediocrity and incrimination that is reflected in the tone of the majority of the posts in these boards.
    Until the "legacy" culture left by Lou is replaced with a more balanced and positive one IBM will continue to struggle toward mediocrity and one day possible irrelevance in the IT sector.
  • Yahoo! message board post by "chz_whiz". Excerpts: Very well put, Andy. I can't agree with everything you said, but you have some very valid points. I was a manager as well, to 3rd line. What was different then was that good times and bad, along with risk and reward, were shared between management and employees.
    Assignments called for unplanned overtime -- everyone pitched in. The economy and business results provided for rewards, as well as cutbacks, for everyone. Everyone shared in the rewards or the pain.
    Yep, IBM made tremendous investments during the 70's for M&L and retraining to protect full employment. Much of the investments paid off; a lot didn't.
    You said IBM did what it needed to do to survive. IBM's pension plan was self supporting, and they didn't make contributions for about a decade, except to fund the court ruling which was just reversed. In fact, much of the excess fund requirements were funneled back to corporate profits and therefore to executive boni.
    The days of sharing risk and reward across the company seem to be over. Sam froze the employee pension plan, while setting himself up for a $4,000,000 annual pension ($10,000 per day, 7 days a week).
    Lou took nearly $0.5 billion in exec compensation during his tenure. He cashed in $424 million of insider stock (parenthetically, the top 7 Enron execs cashed in $402 million) while kicking 100,000 hardworking IBM'ers out the door.
  • Pension Preservation Network: Congressman George Miller Offers Support To The Pension Preservation Network. Excerpts: The Pension Preservation Network Founder and Chairman, Jim Hosking, met with Congressman George Miller, Senior Democrat on the House Education and the Workforce Committee, on August 3, 2006, to discuss the future of Defined Benefit plans in this country. Congressman Miller and Hosking discussed strategies to right the wrongs that have and are being committed against the retirees and future retirees of this nation. Hosking felt it was important to know first hand what Congressman Miller's goals and objectives are for the future of pensions.
  • USA Today: Northwest changes handbook after advice rankles laid off workers. Excerpts: Getting money advice from a bankrupt airline wasn't the thing that most offended some soon-to-be laid-off Northwest Airlines Corp. employees. It was the Dumpster diving tips. Northwest is laying off its customer service workers and baggage handlers at many smaller airports as it reorganizes under bankruptcy protection. Earlier this month, it sent workers in North Dakota, Montana and Texas a handbook with tips for handling their layoffs. It included 101 money-saving ideas such as, "Don't be shy about pulling something you like out of the trash."
    Other tips included using old newspapers for cat litter, asking friends and family for hand-me-down clothes and asking a doctor for free prescription drug samples.
  • Washington Post: Federal Pay: Myth and Realities. By Chris Edwards. Excerpts: We've often heard that civil servants forgo higher private-sector salaries in order to serve the nation selflessly. Many federal bureaucrats are indeed hardworking, but new statistics show that they are anything but underpaid. The Bureau of Economic Analysis released data this month showing that the average compensation for the 1.8 million federal civilian workers in 2005 was $106,579 -- exactly twice the average compensation paid in the U.S. private sector: $53,289. If you consider wages without benefits, the average federal civilian worker earned $71,114, 62 percent more than the average private-sector worker, who made $43,917. [...]
    Federal workers receive generous health benefits during work and retirement, a pension plan with inflation protection, a retirement savings plan with generous matching contributions, large disability benefits, and union protections. They often have generous holiday and vacation schedules, flexible hours, training options, incentive awards, flexible spending accounts, and a more relaxed pace of work than private-sector workers.
    Perhaps the most important benefit of federal employment is extreme job security. According to Bureau of Labor Statistics data, the rate of layoffs and firings in the federal workforce is just one-quarter the rate in the private sector. All these advantages in worker benefits suggest that, in comparable jobs, federal wages ought to be lower than private-sector wages.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Economic Policy Institute: Employers shift health insurance costs onto workers. By Lawrence Mishel. Excerpts: Fewer employees receive health insurance through their employers now than in the past, as coverage has declined from 61.5% in 1989 to 58.9% in 2000 and down to 55.9% in 2004 (the latest data available). Less well known is the fact that those who still receive employer-provided coverage are now paying a larger share of those insurance costs.
    One dimension of this trend can be seen in Figure A, which shows, for both single and family coverage, the share of employees who are required to contribute their own money to help cover insurance premiums. In 1993 about half (54%) of workers in the private sector with individual coverage were required to pay for some of the insurance costs; by 2005 that share had risen to 76%. Almost all workers with family coverage (88%) are required to pay some of the insurance premium out of their own pockets. [...]
    How much more employees pay now than in the past for health insurance premiums is answered in Figure B, which details the employee share of health premiums for all (both individual and family) coverage in 1992 and 2005. The employee share rose from 14.0% in 1992 to 22.1% in 2005. We estimate that this shift in cost-sharing caused employees to pay for half of the growth of employer-provided health insurance premiums over the 1992 to 2005 period. This shift onto employees for basic premium costs does not include any of the higher deductibles or co-pays paid by employees that also have occurred over this same time period.
  • Chicago Tribune: Pricing health care? It's not that easy. Experts say you should shop for the best deal, but hospitals give patients scant information. By Judith Graham. Excerpts: When Margaret Zilm needed cataract surgery, she wanted to know what it would cost. Her medical policy has a $5,000 deductible, and her money was on the line. "I thought I should figure out the impact on my budget," said Zilm, of Kansas City, Mo. But one eye doctor's office told Zilm it had no idea what her insurance company would pay. The insurer wouldn't give out the information. And an official at Missouri's Department of Insurance said such figures were confidential under medical providers' contracts with insurers. "I felt like a criminal for even asking," Zilm said. [...]
    Jodi Bloch is a vice president of the Wisconsin Hospital Association, whose medical plan now has a much higher deductible. Wanting to see how her new insurance would work, Bloch wondered late in her pregnancy what she and her husband would pay for their child's birth. "I thought, OK, I'll be an intelligent consumer and ask the company," said Bloch, who lives in Madison, Wis. To her dismay, Bloch learned that the insurer wouldn't disclose its negotiated fees in advance. "And I'm like, how are people supposed to make good decisions if you won't give them information?" she said.
  • Doctors Taking Less (sic) Medicaid Patients. By Kevin Freking. Excerpts: Many people who rely on government health insurance for the poor have to search harder to find a doctor and increasingly are going to large practices, a study shows. Officials say Medicaid's reimbursement rate is the biggest reason that it is getting more difficult to locate doctors who take new patients under the program. On average, reimbursements are 69 percent of what Medicare pays and even lower compared with what private insurers pay.
  • Milwaukee Journal-Sentinel: Doyle proposes tax break for health care. Under plan, workers who help pay their premiums would get deduction. By Steven Walters. Excerpts: Democratic Gov. Jim Doyle on Wednesday proposed a tax deduction for workers who share in the health care premiums with employers - a tax break he said would cost $50 million a year but help up to 637,700 families or individuals. If the proposal became law, Doyle estimated it would save an average of $236 a year for a family now paying $300 a month to be in their employer's health care plan.
  • Washington Times: Medical miasma. By George H. Lesser. Excerpts: The last time I sought medical help in Italy, I suffered from gastrointestinal distress to such an extent I wasn't eating. If I can't eat in Italy, that is serious. The night before I was due to fly to Washington, I was in a hotel near the Milan airport. I wanted to see my doctor in Washington as soon as possible, so I telephoned him to make an appointment. He questioned me about my symptoms and told me I was too sick to fly. We argued, and then he said I could fly, but only if I got a doctor to prescribe ciprofloxacin ("Cipro") and metronidazole ("Flagyl") for me to start taking that evening.
    I asked the hotel for a doctor. They said it would be faster to go to the clinic at the airport. I followed their advice and found a doctor. He wrote out two prescriptions for me, but said the airport pharmacy had just closed. He directed me to the nearest town with an open pharmacy.
    I couldn't find the drug store. I did find a hospital. I parked in the parking lot, walked in, and asked if I could get the prescriptions filled. The lady got testy and informed me this was a hospital not a pharmacy. I asked for her advice. She told me: "This is a hospital. We practice medicine. If you would like us to treat you, take a seat in the waiting room." Unable to think of a better course, I went out to my car, grabbed my book, went back into the hospital and settled in for a nice, long read.
    After at most five minutes, a male nurse interrupted me. I assumed it was to wrestle with insurance forms in Italian. Instead, the fellow escorted me into a hospital room, where we were joined immediately by a doctor. He spoke English about as well as I speak Italian, so we spoke my language until he ran into problems, then switched to his language until I couldn't find a word. He questioned me closely about my symptoms. He had me lie down on the bed and started poking and asking me how it felt. He had the male nurse draw some blood, and he ran some other tests. He took a medical history and inspected parts of my anatomy that seemed to have nothing to do with the problem.
    I was there six hours. The nurse was in the room with me for all but a few minutes. The doctor was there almost all the time. After a while, he got the test results, which showed I did not have food poisoning, but he wanted to observe me a while longer. Eventually, he concluded I had contracted some kind of intestinal bug, and he gave me a couple of days supply of Cipro and Flagyl.
    I checked in with the waspish lady at the front desk to ask how much I owed. She asked me if I had parked in the hospital parking lot. I said yes. She said I owed one euro and 50 pence ($2). I asked how much for the medical care and the medicine. She said that was free. When I got back to Washington, I saw my doctor. He had a few tests run in the office, gave me full prescriptions for Cipro and Flagyl, and billed me $1,000.
    Most Americans I talk to have a lot of screwy ideas about medical care. They think Americans have "The Best Health-Care System in the World." They think "socialized medicine" doesn't work, because people have to wait too long to get care, and the care isn't very good and they don't have any choices.
    We have many wonderful doctors, hospitals and pieces of equipment in the U.S. However, statistically, we don't do so well. Life expectancy, infant mortality, how long people live with a disease after it is diagnosed: You name the criterion, and we don't compare well with any of the countries that have national health care. And we spend a whole lot more for a lot less health care.
    Here are a few comparisons between the U.S. and France. According to the Organization for Economic Cooperation and Development: French women live 3-1/2 years longer than American women; French men live just over three years longer than American men. Our infant mortality rate is 72-1/2 percent higher than theirs. And 30 percent more Frenchmen smoke than we do, and they consume almost twice as much alcohol. Who knows how much more butter, cheese and fois gras?
    Worried about waiting for a doctor? Or a hospital bed? The French have 37-1/2 percent more doctors than we, and way over twice as many hospital beds, per capita. Worried about choice? French hospitals are 65 percent government run and 35 percent privately run. Take your pick. The health-care system pays. You also get to choose your doctor.
    The difference in the quality of service is difficult for Americans to comprehend. In France, doctors routinely make house-calls. Patients aren't thrown out of hospitals because the insurance companies decide when it is time to go. They stay until doctors decide it is time to go. The French government pays 75 percent of all health care costs. Most of the rest is paid by private insurance. If somebody can't afford private insurance, the government makes up the difference. The bottom line: We pay 43 percent more for health care than the French do, and we get a whole lot less for our money.

New on the Alliance@IBM Site:
  • IBM Pension Lawsuit FAQ about Cooper v IBM (Updated 8/8/06)
  • From the Job Cuts Status & Comments page
    • Comment 8/13/06: Expect a significant "resource action" for field SSR's in the not too distant future. Those who did not go over to Qualex will see the axe swing -Anonymous-
    • Comment 8/14/06: Today's 'State of the Business' meeting w/ Colin Parris stated the facts as bluntly as possible, "Resource Actions" & "Resource Reductions". To what extent, that remains to be seen. But the cold hard fact is true...there will be a reorg including some cuts. It seems reminiscent of the early 90s; another time when the initial action was to 'request' development go to some field or lab support position shortly before the slashing that we remember none too fondly. -Anonymous-
    • Comment 8/14/06: Resource actions in Global Services Integrated Technology Delivery May 30 and July 6, 2006. 146 employees cut. Jobs going to India -Anonymous-
    • Comment 8/16/06: Endicott STG-- a contractor hit of 10 people the last 2 weeks and today we find out we got 2 new hires. Also, rumor of regular employee's being resourced are coming this week or next. Just hope were still getting severance and the 1 year bridge. Last year the VM group in Endicott laid off a bunch and they claimed it was a performance action instead of a Resource action and the people only got 13 weeks severance. The games IBM plays! -Anonymous-
    • Comment 8/17/06: Yes, they want to move all internal jobs overseas and even some external ones if the external customer agrees to it. The jobs left in the US will indeed be face to face jobs for those doing actual work for US customers who demand on-site presence....meaning 100% travel jobs, in most cases. Then, there will still be lots of paper-pushing BSers who sit in meetings on phones all day and don't produce anything real and don't have skills beyond "schmoozes well with others". Once again, IBM is losing track of the fact that the innovators are the technical people doing the work, not the management schmoozers. IBM is preaching innovation but losing jobs that will grow our future innovators. Innovation will not be sustainable in this business model....at least, not in the USA. This will not bode well for the USA. But I suppose that in this new global market world, there is no loyalty toward any country, only to the multi-national corporation. It's not just IBM....it's many of our once great AMERICAN corporations. It's a scary future for the USA. Vote accordingly in November, Folks. -Anonymous-
    • Comment 8/17/06: RTP SWG is playing the numbers game. Downsize 4 high paid long time employees and hire 2 low paid college graduates to make people think IBM is hiring instead of firing. Don't be fueled by the deception. RTP SWG will be 30% transferred to India/China/Brazil by end of 2006 and 100% by end of 2007. -Anonymous-
    • Comment 8/18/06: These will all be small resource actions. Anything larger and they will trip the labor laws and incur larger reductions costs.. So it will be a few 100 here.. a few 100 there every few months to get around the laws protecting workers.. Look it up on the dept of labor web page.. it's all there! -Anonymous-
    • Comment 8/18/06: IBM's 5 year strategy is to reduce US labor to no more than 20% being provided in this country; with the remainder being in India, Brazil and China. Yes folks, meaning the 125K workers presently in the US will go down to 25K. All service deals are having this automatically imbedded in them today. Global Resources are about 1/5 of US cost. So think about it. In the next 5 years 8 out of 10 people will lose their jobs. That needs to be everyone's mindset now. Join the Union NOW...!!! It's the only hope for the US IBM'ers today. Young or old. This is it.-Anonymous-
  • From the General Visitor's Comment page:
    • Comment 8/13/06: laid off ibm'er - the latest IGS utilization targets for 2007. Not sure if this goes under ‘general comments’ section or ‘layoffs’.. Just thought you should know that the new IGS utilization requirements are increasing AGAIN. It looks like for 2007 that the target for IGS’ers will be 107%. That comes out to about 2220 hours per year to be worked, which if you have 4 weeks vacation, and take NO sick time and NO education, you still MUST do about 10 hours per day, every day, all year long. What makes it even more absurd of course, is that even then, there’s still little to no raises, poorer PBC reviews, zero bonuses, at best you get a ‘Thanks’ award so you can go buy yourself a blue gorilla stuffed animal, or perhaps one of those insipid “thank you email” as a reward for weeks, months, or years of worked overtime to achieve ridiculously set deadlines in grossly understaffed projects, etc, etc, etc... -Anonymous-
  • Pension Comments page
    • Comments 08/17/06: The judge that ruled in IBM's favor in our pension case is a Reagan appointee. So all you people who voted for Reagan and thought he was the best thing for this country--guess what--you cut your own throats. Voting has consequences. -Anonymous-
    • Comments 08/18/06: Hey 2nd choicers out there: Now with the legislation and current appeal ruling, I doubt there is anything to stop IBM from converting all of you from the DB to CB plan. It could happen real soon, even well before the planned 1/1/2008 pension big freeze. IBM will cheat you out of your pension benefits once again and you will not have a 3rd choice. If we have collective bargaining rights we might be able to stop this from ever becoming true by negotiating protections in a union contract. It is never too late to join the Alliance and to protect your current benefits and employee rights! -Anonymous-
  • IBM employees on employee raises
    • Comment 8/13/06: I too have been greatly disappointed by the damn greed of our Management. Was dropped from a band 6 to a 4 due to reclassification. Was told it would not affect my chance to get a better position - MY ASS! Last 4 yrs have been trying to get a better position and have all the credentials and experience and can't even get a friggin hello due to this BS buddy system in IBM. Why post jobs when they have someone stuck to their ass already sucking away for the position. I have been looking outside since it appears they don't want the best, but just their friends. Wow! Sam, how can you live on a 29% salary increase? I mean, that raise alone is probably more than my annual pay. Thanks IBM! -PJ-

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