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    Highlights—January 20, 2007

  • Wall Street Journal: Court Lets IBM Pension Plan Stand. By Mark H. Anderson. Excerpt: The U.S. Supreme Court let stand a lower court ruling that said International Business Machines Corp.'s switch to a cash-balance pension plan didn't discriminate against older workers, ending a lawsuit that could have cost the company $1.4 billion.
  • New York Times: Issues Left Unresolved on Pensions. By Mary Williams Walsh. Excerpts: The Supreme Court’s decision yesterday not to hear arguments that I.B.M. illegally discriminated on the basis of age when it changed its traditional pension plan in the 1990s saves I.B.M. a significant amount of money. But it resolves almost nothing for the many other companies that made similar changes to their own pension plans.
    I.B.M. and the current and former workers who filed the lawsuit had previously reached a settlement in which the plaintiffs would receive $320 million to settle certain legal questions. But had the workers also won on the central question of age discrimination, I.B.M. would have had to pay them an additional $1 billion. [...]
    The type of pension plan at the heart of the I.B.M. lawsuit is known as a cash balance plan. The plans became widespread in the 1990s when many pension plans were showing surplus assets. The cash balance design gave companies a way to reduce their pension liability to older employees, who in traditional plans earned the biggest part of their benefits in their later years. In the new design, liabilities grow at a steady rate over the years, but often do not reach the heights of the defined-benefit plans they have replaced.
  • Associated Press, courtesy of Yahoo! News: Supreme Court Turns Down 2 IBM Cases. Supreme Court Refuses to Hear IBM Pension, Workplace Retaliation Cases. By Christopher S. Rugaber. Excerpts: The Supreme Court on Tuesday refused to consider an appeal brought by a group of IBM Corp. employees who accused the company of age discrimination when it altered its pension plan. The lawsuit could have cost the company $1.4 billion.
    The court also declined to rule on a separate dispute between IBM and a former employee who accused the company of retaliating against him after he complained about how company managers handled overtime. [...]
    In the employment retaliation case, an IBM employee named Michael Saville worked for the company for 32 years before accepting early retirement in October 1998. Saville filed suit in August 2000, arguing that he was forced to leave the company in retaliation for his complaints that IBM was violating federal labor law by requiring employees to work overtime without being paid.
  • The Journal News (Westchester, Rockland and Putnam Counties in New York): Supreme Court declines to hear IBM pension case. By Julie Moran Alterio. Excerpts: From the start, the battle over IBM's pension moves has drawn national attention both because of the company's size and its reputation as a paternalistic employer with gold-plated, cradle-to-grave benefits. Energized employees angry over what they saw as a reversal of promised benefits testified before Congress, tried to start a union and won large institutional investors to their cause at shareholder meetings.
    When the court of public opinion didn't persuade IBM to reverse its pension moves, employees turned to the court of law.
    Kathi Cooper, lead plaintiff in the case, was an IBM accountant who became the public face for thousands of her colleagues who rejected the company's argument that moving to a new kind of pension system was better for employees. [...]
    Yesterday's decision is the end of the court fight, but not the end of employee activism, said Lee Conrad of Endicott, N.Y., a 26-year IBM veteran who left the company in January 2000 to start the Alliance@IBM union organizing group. "It's a black day for a lot of IBM employees and retirees," said Conrad, who added that the 6,500 members of his group are still fighting against sending jobs overseas to countries such as India.
    But it is a sign of the change in expectations between 1999 and today that when IBM announced in January 2006 that it would freeze all U.S. pension plans and shift workers into heftier 401(k) plans by 2008, there was barely a peep.
    Workplace expert John Challenger, chief executive officer of Challenger, Gray & Christmas Inc., said today's workers no longer expect lifetime benefits. The Supreme Court's decision not to hear the IBM case reflects that reality, he said.
    "It clearly defines the boundary between the way companies handled their retirement compensation in the past and the present," Challenger said. "Pensions are disappearing. We're in the 401(k) era. In this era, the old social contract between companies and organizations and workers has been replaced by a new one."
    Bethel, Conn., resident Jim Mangi, a 42-year-old technical support employee at IBM, estimates he lost 42 percent of his retirement benefits when IBM made the pension switch in 1999. Delighted when the 2003 ruling came down in favor of employees, yesterday he was philosophical about the end of the fight. "What they are doing may be legal," he said, "but it doesn't make it right."
Letter From the President Alliance@IBM
It was truly unfortunate news that the Supreme Court has declined further review of Cooper vs. IBM. The results truly hurt every employee that was forced into the Cash Balance pension plan. I can only say that our court system cannot be the only path to fairness for IBM employees. The courts interpret the laws; to have fair laws we must work with our elected officials. But mostly we need more power as employees, power to demand the fairness and justice that we deserve.
We should not be summarily forced to give up benefits, as happened with the Cash Balance switch. We should not be forced to work overtime week after week; we should not be forced to retire just because we are older; we should not have to hide in our offices just hoping to hold on to our jobs.
The power of a union is the only true power that can fight back on these fronts. We must insist on a voice, our voice, the people who do all the work that creates the profits at IBM.
Remember: if we had a Union contract the pension changes would have to have been negotiated and approved by IBM employees. Without you, and all of your colleagues, we cannot be strong enough to limit the power and greed (remember Palmisano's 29% raise), and help ourselves and our families.
I'm reminded of the quote from Dr. Martin Luther King jr.: "In the end we will remember not the words of our enemies, but the silence of our friends".
Please don't be silent, please join the Alliance, and ask your coworkers to join us in our continued fight. The lawsuit may be over, but we sure aren't over.
Linda Guyer, President, Alliance@IBM/CWA Local 1701
  • Poughkeepsie Journal: Door opened for IBM payouts to former local workers. By Craig Wolf. Excerpts: The decision by the Supreme Court on Tuesday not to review a lower court's ruling upholding IBM Corp.'s pension plan clears the way for $320 million to be distributed to present and former employees who have it coming to them as a result of an earlier settlement. For Harry Hughes, a Wappingers Falls man who was downsized out of IBM in 2002, the court's decision came as no surprise. Had the plaintiffs been victorious, he would stand to collect additional dollars in pension. [...]
    Janet Krueger, a Minnesota woman who formerly worked for IBM, helped launch the pension case in October 1999 and has kept close track of it. She said as many as 300,000 people are affected and would share the $320 million IBM agreed to pay, which averages out to a little more than $1,000.
    Krueger, now a lawyer, said there is one small window of time in which a further appeal to the high court could be made for rehearing, but only if there were a similar case in a different federal court circuit than this one, and with a contrary result. That's hardly likely, she said.
    The good news is with all legal appeals out of the way, IBM, under the earlier settlement, will have 90 days to begin paying out the $320 million, Krueger said.
    In addition to the money, "it's a moral victory," she said, that IBM agreed to the partial settlement.
    William Costine of Beacon, who works at East Fishkill IBM and is active with the Alliance@IBM union, said even a full victory in the case would not have compensated employees close to what they believed was due them.
    "Even if we had won all three rounds, it was only going to be pennies on the dollar," Costine said. "It certainly isn't justice." The decision also means no legal stone has been left unturned by employees and retirees who had hoped to get even bigger pension payouts by arguing the plan was age-biased.
    The other group left wondering after the court's refusal is employers who are in the same boat as IBM on their cash-balance pension plans. They will have to find other ways to get final answers to whether they're OK or not, since the bellwether IBM case, had it gone to the Supreme Court, may have yielded some more guidance.
    For other companies in straits similar to those IBM has now escaped — variously estimated at 1,200 to 1,500 — some degree of uncertainty about the status of their cash-balance pension plans may continue. These are firms that adopted cash-balance plans in what might be called a gray period between 1999 and June 2005. In 1999, the Internal Revenue Service stopped issuing letters of approval to companies switching to cash-balance plans.
  • Computer Business Review: IBM now under "formal" SEC scrutiny. IBM Corp is being "formally" investigated by the US Securities and Exchange Commission over disclosures relating to how it treated stock options as an expense on its first-quarter 2005 income statement. The Armonk, New York-based IT giant received notification of the SEC's move yesterday. [...]
    The hubbub started when IBM officials, ahead of its April 26 first-quarter earnings last year, suggested to Wall Street analysts that the company's stock-option expenses would reduce earnings by about 14 cents per share. This motivated many analysts to adjust their estimates for the quarter IBM accordingly. But when expense turned out to be only 10 cents per share, several analysts charged IBM with misleading them into issuing artificially low estimates
  • Yahoo! IBM Pension and Retirement message board: "Form 5500" by "fhawontcutit". Excerpts: As I have indicated numerous times on this board, older employees don't have a lot of options on healthcare. If they don't stick around, where are they going to go, and what are they going to do about healthcare?
    If they are retirement eligible and get either the FHA or the old medical plan, they have to consider whether
    • IBM will keep a retiree medical plan in place until they reach Medicare eligibility. If the employee also covers a spouse, both employee and spouse need coverage until Medicare eligibility.
    • The premiums will be affordable.
    Do people really want to count on having an IBM health plan available to them? (Even if it's access only?)
    Also bear in mind that FASB changes are coming that (I believe) will have a significant impact on retiree medical plans.
    If the employees leaves IBM and decides not to retire, he/she still needs coverage under a group plan. He/she has to
    • Work for a company/organization that has a group plan
    • Continue working for that company/organization until Medicare eligibility.
    The WSJ ran an article about two years ago that discussed the number of millionaires in their late 50's and early 60's who continue to work -- simply because of health care issues. They hold onto their jobs because the jobs include group coverage. [...]
    It's not just a pension issue. The health care issue is a very real one, especially for older employees, unless you are independently wealthy and can self-insure.
  • Yahoo! IBM Pension and Retirement message board post by "bits_bytes_and_bugs". Excerpts: Expect in the 2006 Form 5500 that total (IBM) US population will decline as global resourcing had grown. But 2007 will be the year where global resourcing will explode and US numbers will rapidly decline.
    I also think the demographic split is a result of brain-drain. Those who are skilled and able to leave for better opportunities are leaving in droves, especially in the services side of the business. The (very) old are staying ("hanging" on in Lou's terminology) to try to qualify for the FHA and due to the thinking that it is difficult to impossible to get an equivalent or better job in the industry when you're in your 50's or above.
    The very young are too naive to realize the insidious nature of IBM's anorexic and brutal HR policies. Also consider that IBM is making great efforts to retain the young people.
  • Yahoo! IBM Pension and Retirement message board post by "alwaysontheroad4bigblue". Excerpt: I disagree here. My experience has been that IBM churns "young people" quickly. I've been on many projects where "kids" right out of school leave IBM within a year of hiring, or perhaps two or three years. It doesn't take long for them to realize how dysfunctional the company is. They don't leave because of pension or medical issues, but because of all the other issues employees complain of on the Vault IGS bulletin board. They are aware of the "anorexic and brutal" HR policies once they join the company...issues that certainly didn't come up during their recruiting phase.
    Most of the projects I've been on lately have been staffed by a mix of aging baby boomers (i.e. Lou's hanger-on'ers), "kids" fresh out of school, and...a large proportion of people brought in from India.
  • Yahoo! IBM Pension and Retirement message board post: Lou Gerstner's "Carlyle Group". By "dr_bendoveru2". Excerpts: Some of you may be interested in reading just how powerful the Carlyle Group in Washington and around the world. This is the kind of Washington 'insider power' we are up against in the Cooper vs. IBM case since it has such a impact across American Corporations. This will be very interesting to see how and "if" the Supreme Court handles it.
    Here's a French Website: http://stopcarlyle.ifrance.com/. There is more information at the following website: http://www.deepblacklies.co.uk/the_kiss_of_death.htm.
    A private equity fund, the Carlyle Group is directed by Louis Gerstner, former CEO of IBM, since january 2003. Till then, Franck Carlucci, former secretary of Defense of Ronald Reagan from 1987 to 1989, and former director of the CIA, was the manager. Links between politics and economics are very strong. We find as advisers for Carlyle Georges Bush (former President of the USA), Otto Pohl (former president of the Bundesbank), John Major (former Prime Minister of the UK), Arthur Levitt (former president of the Security Exchange Commission), James Baker (former State secretary of George Bush senior), Karl Fidel Ramos (former president of Philippines), Henri Martre (former president of Matra Aerospatiale)…Even W. Bush, president of the USA, worked for Caterair, a subsidiary of the Carlyle Group, and till the attacks of 9/11, members of the Bin Laden family were members of the advisory board.
  • Yahoo! IBM Retiree message board: "A little retirement humor" by "Bob". Full excerpt: And They Ask Why I Like Retirement!
    Question: How many days in a week? Answer: 6 Saturdays, 1 Sunday
    Question: When is a retiree's bedtime? Answer: Three hours after he falls asleep on the couch.
    Question: How many retirees to change a light bulb? Answer: Only one, but it might take all day
    Question: What's the biggest gripe of retirees? Answer: There is not enough time to get everything done.
    Question: Why don't retirees mind being called Seniors? Answer: The term comes with a 10% percent discount.
    Question: Among retirees what is considered formal attire? Answer: Tied shoes.
    Question: Why do retirees count pennies? Answer: They are the only ones who have the time.
    Question: What is the common term for someone who enjoys work and refuses to retire? Answer: NUTS!
    Question: Why are retirees so slow to clean out the basement, attic or garage? Answer: They know that as soon as they do, one of their adult kids will want to store stuff there.
    Question: What do retirees call a long lunch? Answer: Normal.
    Question: What is the best way to describe retirement? Answer: The never ending Coffee Break.
    Question: What's the biggest advantage of going back to school as a retiree? Answer: If you cut classes, no one calls your parents.
    Question: Why does a retiree often say he doesn't miss work, but misses the people he used to work with? Answer: He is too polite to tell the whole truth.
    QUESTION: What do you do all week? Answer: Mon to Fri. Nothing, Sat & Sun I rest.
  • New York Times: They Say We Have Too Many Lawsuits? Tell It to Jack Cline. By Adam Cohen. Excerpts: Jack Cline is in a hospital here fighting for his life, stricken by leukemia that he says he got from exposure to benzene at his factory job. In most states, he would be able to sue the companies that made the benzene. But Alabama’s all-Republican, wildly pro-business Supreme Court threw out his case.
    In a ruling that would have done Kafka proud, the court held that there was never a valid time for Mr. Cline to sue. If he had sued when he was exposed to the benzene, it would have been too early. Alabama law requires people exposed to dangerous chemicals to wait until a “manifest” injury develops. But when his leukemia developed years later, it was too late. Alabama’s statute of limitations requires that suits be brought within two years of exposure. [...]
    Big business and its allies are loudly promoting “tort reform” by arguing that America is drowning in frivolous lawsuits. They are winning the public relations battle. Everyone knows the story of the woman who sued McDonald’s because she was burned by hot coffee. But few people know of the Jack Clines — and there are many of them — who have been denied their day in court.
    Corporate America — with its large contributions to political and judicial candidates, and its top-dollar lobbyists — has had remarkable success persuading legislatures and courts to erode the bedrock principle of civil law: when people are injured, they are entitled to sue for damages. [...]
    Perhaps the most insidious tactic for slamming the courthouse door on injured people is the stealth use of “pre-emption.” When federal and state laws conflict, the federal law pre-empts, or invalidates, the state law. The Bush administration is taking advantage of this principle by issuing weak regulations in a wide range of areas to wipe out stronger state-law protections. When people try to sue, they may find that their legal rights have been swept away. Among the areas the administration has focused on are automobile roof crushes and mattress flammability.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Washington Post: A New Consensus on Universal Health Care. By Steven Pearlstein. Excerpts: On the surface, it looked to be just another Washington news conference, part of the white noise of the political and policy process.
    But this one was different. There, at the National Press Club, stood the president of the Business Roundtable, representing the country's largest corporations; the president of the Service Employees International Union, the country's most vibrant union and one of its fastest-growing; and the president of AARP, the formidable seniors lobby. They put aside their usual differences to deliver a clear, simple message to President Bush and congressional leaders of both parties:
    We stand ready to give you the political cover you need for a centrist, bipartisan fix for a broken health-care system. Or, if you refuse, we stand ready to embarrass you and run you out of office.
  • Chicago Tribune: Few retirees facing loss of health benefits. By Tami Luhby. Excerpts: The good news is that most retirees lucky enough to have employer-sponsored health benefits are going to keep them this year. The bad news is that they will have to pay a lot more out of their pocket for medical care, especially if they are younger than 65. [...]
    However, premiums for new retirees increased in 2006 an average of 15.1 percent for those younger than age 65 and 9.6 percent for those eligible for Medicare. Pre-65 retirees paid an average of $227 in monthly premiums, while older ones paid an average of $110. Retirees of all ages were responsible for about 41 percent of their total premiums. [...]
    "People who worked their whole lives to earn retiree health coverage are now having to dig deeper into their pockets to pay for it," said Drew Altman, Kaiser's chief executive. Current workers, however, will probably be even less fortunate when they retire, experts say. Ten percent of companies said it is likely that in 2007 they will terminate benefits for future retirees. (Editor's note: IBM has already terminated retiree health benefits for new employees.)
New on the Alliance@IBM Site:
  • From the Job Cuts Status & Comments page
    • Comments 1/18/07: RTP Guy, just because you can't prove that IBM is outsourcing your job to India doesn't mean that your job isn't on it's way to India along with most of the development and testing jobs in RTP SWG. My news came from a 3rd line that I know socially. It warned me that it was time to start job hunting before I had a lot of competition for jobs from several hundred other former RTP SWG employees. When information comes confidentially from those in the know, it can't be set free. -InTheKnow-
  • From the General Visitor's Comment page:
    • Comment 1/19/07: I have been with IBM for 27 years now, and I too fondly recall the earlier benevolent and fun days. Like many of you, I have suffered through appraisal lowerings, no raises for years, and mandatory overtime. But, I understand and accept that the good old days are gone forever. While I share the opinions of many of the people writing comments here, I have to say that in general, these pages are filled with a collection of whiners. I despise the changes to our benefits, executive greed, and off-shoring of jobs, but the sad reality is that for the foreseeable future, this is the card hand we have been dealt.
      Regarding a union in IBM of US workers, my prediction is that it will never happen, and for the following reasons. First, the company is transitioning increasingly to a more mobile/consultant, and work-at-home work force. We also work with IBMers from around the world. The result of these changes is that face-to-face interactions with other IBMers become harder, and this undermines the sense of community, a shared identity and common issues.
      Secondly, the company wants a transient work force. All of the current HR practices point to this. The change in technology is rapid, and the company wants only the best and brightest people, and a constant influx of new talent. Forgive my sports analogy, but like a football team, you now must try out for your employment position every year. You are no longer guaranteed to be a starter.
      Cash Balance Plan, the manage the 2s out of the business, are all a geared to ensure a turnover of people. The new model for the ideal employee is one that will leave the company after 5 to 10 years. No company owes you anything - sad but true. So stop the whining, and take/accept the personal responsibility for your own future, which is the quality which has made our country great. If you don't like the environment, then leave. Look inside yourselves. Life is too short to be so miserable. And yes, I have a exit strategy which I am working on, which gets me out of this company in 18 months, and into a new career. -Reality Check-
    • Comment 1/19/07: Boycott the Spirit event! IBM wants to build up our spirit? Give us back our pension! Give us decent raises! Stop terminating older employees with trumped up performance issues! Stop offshoring our jobs! Everyone--boycott all IBM "feel good events"! -HadIt in POK-
    • Comment 1/19/07: Reality Check, it's people like you that make me sick. Instead of standing up and fighting for what was promised, you're a coward. It's OK with you that IBM executives are stealing your pension, medical, etc? You say "accept responsibility for my own future". I was promised a future for many years and IBM stole it. You adjust, I want justice. I may be a whiner, but your a brown-nose coward and probably also a corporate troll. If you don't belong to Alliance, go away. -Anonymous-
  • From the Pension Comments page:
    • Comment 01/16/07: Ok. So now we went all the way to the Supreme Court, and we lost our chance to argue age discrimination any further. They refused to hear our final appeal. This was the founding issue for the Alliance; but we never rested on the assumption that this would be turned around, did we? So now what? Are IBM employees ready to do what should have been done years ago? Join Alliance. Actually talk or communicate in some way to your co-workers or your IBM retiree friends. We need a union contract. We need one NOW! It's up to all of us. No help coming from anyone but our own. Let's do this. -nobodybutme-
    • Comment 01/16/07: "IBM's lawyers told the Supreme Court that President Bush signed into a law the Pension Protection Act of 2006 that ratified the appeals court's view that such cash-balance plans do not discriminate based on age." -dumpbush-
    • Comment 01/17/07: ..."IBM's triumph in the case is a victory for employees..says Klein, because it means companies will be more likely to switch to cash balance pension plans instead of dispensing with pensions altogether.."
      Huh? Really? This is certainly not the case.
      How come IBM no longer offers ANY pension to it's newer employees and how come IBM is freezing contributions for whatever employee pension plan benefits the employees that have an IBM pension will get?
      How is that an employee VICTORY????
      The cash balance plan was solely instituted to screw the employee out of future retirement benefits so a company or corporation can save money on it's bottom line and report profits (vapor type) by not honoring it's promised obligations!! How is that an employee VICTORY??? This comment by Klein and that pension group that advises corporations on pension benefits and the like are so incested with IBM HR and Randy MacDonald; it can't be made more obvious.
      It's time for IBMers and all employees in all corporations and companies to THINK and not take the BS from these folks like Klein that think we are mindless idiots who will believe anything we hear. Don't let the rest of your benefits fall by the wayside or be interpreted in a court of law: we need our lawmakers to honor fairness and desperately need the protection and power of a contract! -whatvictory?-
    • Comment 01/18/07: Numbers don't lie, is the saying. When IBM employees realized that the IBM cash balance switch of 1999 reduced the pensions of those that served IBM the longest, by as much as 40%, the numbers must have been lying! So it seems, to our nation's highest courts!
      What happened to American values? Numbers don't lie. IBM by it owns admission designed the cash balance plan, so that younger tech workers could be enticed to work for IBM, for fast growing portable pensions. The higher pay and benefits made available to new IBM workers, was at the expense of IBM workers, after decades of loyal service. The Supreme Court's decision not to rule on Cooper vs IBM does not change the facts or the truth.
      IBM cheated older workers to pay younger ones more. Some would consider that, age discrimination but our higher courts and judges, do not seem to care. After all, they have their nice pensions as does former IBM CEO Gerstner and the rest of IBM's con-men at the helm. Seems immoral, at the very least. IBM for me is now, Immoral Business Machines! Our Supreme Courts, justices should be ashamed for not even making any remarks. -Screwedby theSC-
  • Raise and Salary Comments
    • Comment 1/17/07: Salary = 60K; Band Level = 6; Job Title = IT Specialist; Years Service = 7; Hours/Week = 40+; Your Gender = Male; Message = Pay at IBM is a Joke. You do three times the work because they cut costs and staff, but every year they find a way to justify not increasing salaries. We've barely seen any kind of increase, other than an increase in responsibilities. I'm doing the work of someone in a higher band range than me, and getting paid scratch in compensation. About as funny as a gaping wound on your genitals, and just about as rewarding as well. -No-Me-Gusta-
    • Comment 1/18/07: Salary = 72000; Band Level = 6 (no kidding); Job Title = Consultant (IT Spec); Years Service = 1; Hours/Week = 40; Your Gender = m; Div Name = ITS' Location = CA; Message = I think I'm gonna stay at that salary for next few years now that I think I was given more initially -Anonymous-

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.

 



   
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