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www.DukeEmployees.com - Duke Energy Employee Advocate Pensions - Page 4- Retired Lt. General William Odom Big Pensions for Executives; Big Losses for EmployeesEmployee Advocate – www.DukeEmployees.com – June 25, 2006This article was written by Ellen E. Schultz and Theo Francis. It was published in the Wall Street Journal on June 23, 2006.
Companies Run Up Big IOUs, Mostly Obscured, to Grant Bosses a Lucrative Benefit To help explain its deep slump, General Motors Corp. often cites "legacy costs," including pensions for its giant U.S. work force. In its latest annual report, GM wrote, "Our extensive pension and (post-employment) obligations to retirees are a competitive disadvantage for us." Early this year, GM announced it was ending pensions for 42,000 workers. But there's a twist to the automaker's pension situation: The pension plans for its rank-and-file U.S. workers are overstuffed with cash, containing about $9 billion more than is needed to meet their obligations for years to come. Another of GM's pension programs, however, saddles the company with a liability of $1.4 billion. These pensions are for its executives. This is the pension squeeze companies aren't talking about: Even as many reduce, freeze or eliminate pensions for workers, their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon. Companies disclose little about any of this. But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America's pensions. Among the findings:
One reason executive pensions have grown so large is that they are linked to ballooning overall executive compensation. Companies often design retirement payouts to replace a percentage of what a person earns while active. But for executives, the percentage of pay replaced is itself higher. Compensation committees often aim for a pension that replaces 60% to 100% of a top executive's compensation. It's 20% to 35% for lower-level employees. David Dorman was chief executive of AT&T Corp. from 2002 until its merger with SBC Communications in November. He left in January. His total of five years at AT&T earned him a yearly pension of $2.1 million. That will replace 60% of his annual salary and bonus in his final three years. By contrast, former AT&T accountant Ralph Colotti's $28,800 annual pension replaces 33% of his final pay. He was at the company for 33 years. Colotti's pension was held down by a change AT&T made in 1998 in the formula used to calculate pensions. The switch had the effect of freezing pension growth for older workers like him. The 55-year-old now works at another company with a pension plan. "Working here another 10 years won't make up for what my old pension would have been" without AT&T's change in formula, he said. 'Reasonable' deal AT&T described its retirement benefits as excellent and said a pension on the scale of Colotti's is good in the telecommunications industry. Dorman's richer deal is "reasonable, customary and comparable to what similarly sized companies offer," AT&T said. A spokeswoman noted that "in any industry, senior executives are almost always provided with enhanced levels of benefits as a way to recruit and retain the best talent and the best leadership possible to lead the company." In percentage of pay replaced, Pfizer's chairman and CEO, Henry McKinnell, does best of all. His future $6.5 million-a-year pension will replace 100% of his current salary and bonus. Even as executives' pensions grow, many companies are curtailing those for the rank and file. In one move, hundreds of employers, including Boeing Co., Xerox Corp. and Electronic Data Systems Corp., have switched to pension formulas known as "cash balance" plans. One effect is to slow the growth of older workers' pensions or halt it altogether. Other companies, including Verizon Communications Inc. and Sears Holdings Corp., are freezing their pension plans for some workers. A freeze leaves intact pensions already earned but prevents any further growth during a worker's career. Some employers have added pensions for executives at about the same time as they limited those for others. Allied Waste Industries Inc. froze pensions for certain salaried workers in 1999. Among those affected was Brad Green, then a safety official at a business Allied Waste had acquired. Although he never expected his pension to be big, Green, 45, said the freeze meant any future growth "was basically just wiped out with the stroke of a pen." Four years later, Allied adopted a pension plan that covers 10 executives. It did so "to provide a competitive recruitment and retention benefit," said Allied's treasurer, Michael Burnett. He noted that the plan that was frozen had come from a company Allied acquired. Burnett added that all employees have a 401(k), a savings plan to which they can contribute from their own earnings. Many companies, including Allied, match part of employee contributions. The 401(k) strategy Companies that restrict regular pension plans often point to the 401(k), some noting that they've enhanced their match of contributions. Unlike pension plans, 401(k) plans don't create a corporate debt or liability, since employees provide most of the assets and firms are typically free to halt any contributions of their own. Companies generally are also free to alter, freeze or end regular employees' pension plans, unless a union contract is involved. But executive pensions often are protected from management interference by employment or other contracts. By curtailing pensions for regular workers, large companies have reduced pension obligations to them by billions of dollars in recent years. So pension obligations to regular workers are stable or shrinking at many companies while those for executives rise. At BellSouth Corp., for example, the obligations for pensions for ordinary workers have edged down 3% since 2000. The liability for pensions for executives is up 89% over the same period. The promise of any pension becomes a corporate obligation. Although the payments are in the future, the promise means the company has a liability now. And a number can be put on it. Pfizer's promise to pay McKinnell $6.5 million a year for life in retirement equals an $83 million liability for Pfizer today, federal filings by the drug-maker show. Pfizer defends McKinnell's pension as fair. When Edward Whitacre, chairman and CEO of AT&T Inc., turns 65 in November, he'll be entitled to a pension of $5.4 million a year for life, plus an $18.8 million lump sum. For this, AT&T's liability today is $84.4 million, according to an actuarial estimate done for The Wall Street Journal by Katt & Co. of Mattawan, Mich. AT&T said Mr. Whitacre's pension reflects four decades of service and 15 years of "very, very strong and visionary management" as chief of the company, which was called SBC much of that time. UnitedHealth Group Inc. Chairman and CEO William McGuire will get a $5.1 million annual pension after he retires, plus a further $6.4 million at retirement. The result is a UnitedHealth liability of about $90 million, according to two actuaries. UnitedHealth declined to comment on their estimate. Companies sometimes offer several tiers of pensions for the highly paid. The structure at IBM illustrates this. Its chairman and CEO, Samuel Palmisano, is due a yearly pension of about $4.7 million in retirement after age 60. He's now 54. IBM's liability today for this is about $50.3 million, according to an estimate by Katt & Co. Another IBM pension plan, which last year covered eligible executives earning $351,000 or more, had a $204 million liability at year-end, company filings show. And for a third plan covering a broader group of the well-paid, IBM had obligations totaling $1.1 billion. IBM declined to say how many are covered by these plans, saying only that it is "thousands." Shifting liabilities To put the figures in perspective: The liability for IBM's regular U.S. pension plan, covering 254,000 workers and retirees, was $46.4 billion at the end of 2005. IBM no longer provides pension coverage for new hires. An IBM spokesman described the estimate of its liability for Palmisano's pension as high but declined to provide another figure. He said Palmisano's pension from 32 years at the company will replace about 45% of his compensation, which the spokesman called below average for heads of major companies. A result of these trends is that executive pensions make up a significant portion of total pension liabilities at many companies: 12% at Exxon Mobil and Pfizer; 9% at Metlife Inc. and Bank of America; 19% at Federated Department Stores Inc.; 58% at insurer Aflac Inc. Companies' retirement liabilities for their executives have also grown through another little-noticed trend: Over recent years, an increasing portion of executives' pay has been postponed, via pension and deferred-compensation plans, rather than given in current paychecks. Even if a company's liability for executives' pensions totals hundreds of millions of dollars, its employees and shareholders may never know. Companies don't have to report this obligation separately in federal financial filings. A few specify it in a footnote, and some provide clues that make it possible to derive the figure. Perhaps the most significant effect of the limited disclosure is to make it difficult, or impossible, to evaluate company statements about their retirement burdens and the need to cut benefits. To see this, it's necessary to understand a bit about how pensions are accounted for. Pension plans, whether for executives or for others, are obligations to pay. In other words, they're debts. And like any debt, they have what amounts to a carrying cost. That carrying cost is part of a company's pension expense. In the case of pensions for regular employees, the expense is partly or wholly offset by investment returns on money the company set aside in the pension plan when it "funded" it. Executive pension plans are different. For tax reasons, they're normally left unfunded. They have no assets set aside in them. That means there is no investment income to blunt the expense. The result is that obligations for executive pensions create far more expense for an employer, dollar-for-dollar, than pensions for regular workers. Bigger expense In Pfizer's overall U.S. pension obligation of about $9 billion, executive pensions account for about one dollar in eight. Yet the pension expense they generate is proportionately far larger - equal to more than half as much as that from pensions for regular employees and retirees, who are much more numerous. The executive plans cover 4,200 people. The regular plans cover more than 100,000. When General Motors cites retiree costs, the giant automaker has a point: It owed nearly 700,000 U.S. workers and retirees pensions that totaled $87.8 billion at the end of last year. But $95.3 billion had already been set aside to pay those benefits when due. All of these assets are earning investment returns, which offset the pensions' expense. GM lost $10.6 billion in 2005. But deep as its losses have been, they would have been far worse without the more than $10 billion per year in investment income that the GM pension plan for the rank and file generates. The pension plan for GM executives is another matter. Unfunded to the tune of $1.4 billion, it detracts from GM's bottom line each year. Earlier this year, GM announced it would freeze the pensions of its 42,000 salaried workers starting next January, as well as of those 5,200 highly paid employees. The freeze of the executive pensions will cut GM's pension liability by $60 million, while its freeze of salaried workers will yield a far bigger reduction, $1.6 billion. A spokeswoman for GM said its concerns about its pension plans have eased, though the company remains concerned about retiree health-care costs. With the pension freeze and improved returns on its pension assets, including billions of dollars GM has contributed to the plans in recent years, "I would say pension really is not a problem anymore," the spokeswoman said. She said that GM has no fixed obligation to pay the executive benefits and could renege at any time, although she called such a move unlikely. GM has often said its U.S. pension plans added about $800 to the cost of each car made in the U.S. in 2004. It declines to say how much was due to executive pensions.
Boehner Eats His Pension PredictionEmployee Advocate – www.DukeEmployees.com – June 16, 2006It was only last week that House Majority Leader John Boehner boasted that the pension bill would be passed by July 4. He is already eating his words, according to MarketWatch. Boehner said "I've given up on setting dates." Boehner twisted arms in the House to pass draconian pension measures that would cost employees pension money. The Senate passed a more reasonable bill. Boehner’s attempt to run roughshod over the Senate is not working out. His foolish prediction of when the Senate and House would agree on the pension bill blew up in his face in only a matter of days! Boehner replaced the infamous Tom DeLay as House Majority Leader and is proving to be just another Tom DeLay. Boehner Backs Off Pension Bluster
Boehner Backs Off Pension BlusterEmployee Advocate – www.DukeEmployees.com – June 15, 2006House Majority Leader John Boehner is the ring leader in trying to lock employees into cash balance pension plan losses. If he could just push through retroactive cash balance plan legalization, corporations would be free to keep the millions of dollars taken from employees’ pensions. But Bloomberg News reports that Boehner has admitted that the federal pension legislation probably will not reward corporations with retroactive protection from employee pension lawsuits! Boehner has already boasted that the pension bill will be passed by July 4, according to The Hill. Who cares when it is passed? Boehner just needs to keep his grubby hands off the employees’ pension money! Over 1,800 corporations have helped themselves to employees’ pensions through cash balance conversions. That never made the plans legal. It only meant that the executives were willing to take a chance because of all the pension money that could be taken from employees. The red-handed executives went screaming to Congress to save them. IBM’s cash balance plan has already been ruled illegal. After that, the Treasury Department suspended licensing of cash balance plans. Over 300 other corporations have been sued over pensions, including Duke Energy, Bank of America, and AT&T. IBM is appealing a portion of the ruling. Boehner said "The idea of going back in a retroactive fashion has met with stiff resistance in both the House and the Senate." That is terrific news! It shows that not everyone in Congress is willing to sell out employees’ pensions to reap more lobbyists’ dollars. This is no time for employees to back off. Contact your senators and congressman. Tell them:
For those who have not grasped the fact that cash balance plans mean pension losses, consider this: The Government Accountability Office found that older workers who were forced into cash balance plans could lose as much as $250,000 in pension benefits. Could that possible be worth a letter to Congress, or maybe a phone call? Boehner Tries to Steamroller Congress on Pensions
San Diego Settles $173 Million Retiree SuitEmployee Advocate – www.DukeEmployees.com – June 9, 2006Thursday, San Diego tentatively reached a $173 Million settlement with a retiree, according to KGTV. William McGuigan charged that the city did not contribute enough to the San Diego City Employees' Retirement System between 1996 and 2005. San Diego will also have to pay Mr. Conger's legal fees. Now San Diego can concentrate on the other eleven pension lawsuits!
Boehner Tries to Steamroller Congress on PensionsEmployee Advocate – www.DukeEmployees.com – June 7, 2006House Majority Leader John Boehner has expressed frustration that he has not been able to push his version of “pension reform” through Congress, according to MarketWatch. Boehner was able to lean heavily on the House, but he is really a lightweight when it comes to influencing the Senate. Boehner has lamented over the slow pace of negotiations with the Senate. This is good news for everyone who stands to collect a pension. The more frustrated Boehner becomes, the better it is for all working Americans. Boehner said "I want this bill over with." Sure, he wants the bill over with and he wants your pension benefits in the pockets of the corporate executives! Boehner said “We've been at this for three months and we don't have this resolved yet.” Some workers have spent over 30 years earning their pensions. But Boehner is upset because it is taking him over 3 month to scuttle these benefits. Boehner is totally controlled by corporate lobbyists and has repeatedly said how great cash balance plans are. Of course, he does not want a cash balance plan for himself – he just wants you to have one! That is the history of cash balance plans. Those who are not stuck with cash balance plans are always trying to force them onto someone else. The more cash balance plans they can force onto others, the more money that ends up in their pockets! All the press is about underfunded pension plans, but some in Congress are using the bill as an opportunity to try to retroactively legalize cash balance plans. The Senate version of the bill has provision to protect employees from being wiped out by cash balance plans. So, you can see why Boehner is frustrated. Former House Majority Leader, Tom DeLay, was finally hounded from the position. As the new House Majority Leader, John Boehner is the new Tom DeLay. What has changed? Nothing! Remember, Boehner is the one who once passed out checks from tobacco lobbyists on the House floor, right before a vote! Maybe Boehner should try pulling his hair to assuage his frustration. Then again, butting his head against a wall may produce more results. The Employee Advocate suggests a concrete wall and a long running start! John Boehner is Death to Pensions
SC Justices Unanimously Order Pension RefundsEmployee Advocate – www.DukeEmployees.com – June 3, 2006The South Carolina Supreme Court has ordered the state to issue pension refunds to 14,000 working retirees, according to the Associated Press. The state had requested a reversal of a May 4 ruling. On Thursday, the justices unanimously upheld the ruling that pension refunds must issued. The $30 million in pension refunds must be made by July 1. The state was also ordered to pay 6 percent interest on the refunded pension money. The interest rate will jump to 11.25 percent if the refunds take over 30 days to be issued. Teacher Sandra Balthis said "It's such an incredible sense of relief. Its been an emotional roller-coaster." There was the predictable scare tactic about outrageous attorney fees. But a judge will determine the attorney fees. The justices also said that any legal fees will not come out of the pension refunds. Incredibly, a number of employees are always bluffed out of taking any legal action because of “those high attorney fees.” But if the defendant is ordered to pay the fees, the employees will get the entire settlement. If the attorney fees are contingent upon winning the case, no fees are owed if the case is not won. And, even if fees must come out of the settlement, any amount collected will be infinitely better than zero! In such cases, the only way an employee can lose is to refuse to participate. But there will always be some employees who lose out because they are terrified that they may have to share a portion of any settlement to compensate the attorneys for their work! Never mind that there would be no settlement without the attorneys. Joe Blow: “I got a $140,000 pension refund, how much did you get?” Nervous Nelly: “Nothing, but I did not take no chance on paying no dadgum lawyer!”
$23 Million Settlement in Pension SuitEmployee Advocate – www.DukeEmployees.com – May 29, 2006Time Warner, America Online (AOL), and Ernst & Young are included in the defendants who will make a $23 million pension settlement, according to Reuters. The corporations were charged in 2004 with issuing false and misleading statements. AOL was charged with using improper accounting practices. The lawsuit was filed by the Pennsylvania Public School Employees' Retirement System, the Pennsylvania State Employees' Retirement System, the State Workers Insurance Fund and the Tobacco Settlement Investment Board.
American Benefits Council President Tells Truth!Employee Advocate – www.DukeEmployees.com – April 20, 2006Some things are just unbelievable. President of the American Benefits Council James Klein has told the complete truth, at least once, based on an Associated Press article! He said "I don't think that many people in Congress would be quite so indifferent to the demise of the defined-benefit plan if they didn't have such a robust plan themselves.'' Judging by the name, one might think that the American Benefits Council is a benevolent group which looks after the interests of working Americans. This is definitely not the case. When you deal with pensions and politics, everything is filled with trickery and deception. The names of groups and the names of bills are chosen to conceal their true purpose. The American Benefits Council represents companies with pension plans – not employees. Its purpose is to get money from the pension plans into the hands of executives. This can only be accomplished by leaving employees with diminished pensions. There is usually a little slant, a little twist, a little shading of each word uttered by the council to make cash balance plans seem better than they really are. The truth is that cash balance plans are rotten to the core. It’s amazing, but Mr. Klein’s statement is 100% true. Maybe it was a Freudian slip, but the truth actually did come out of his mouth! Members of Congress can afford to be aloof about pension legislation. They know that any cockamamie laws passed by them will not diminish their pensions one bit. Members of Congress could vote in a cash balance plan for themselves – IF they wanted one. But they are not stupid enough to want one! A cash balance plan conversion would rob members of Congress of much of their pensions. No one ever wants a cash balance plan! It is always a case of someone else forcing a cash balance conversion upon unwilling employees. By no coincidence, those forcing the cash balance conversions, stand to enrich themselves by doing so. That is the only reason cash balance conversions are so prevalent. It is also the reason so many employees are protesting cash balance conversions. It is the very reason employees are suing corporations forcing the cash balance conversions. Rep. Sanders on Cash Balance Pension Plans
Rep. Sanders on Cash Balance Pension PlansEmployee Advocate – www.DukeEmployees.com – April 18, 2006Below is the statement to Congress made by Congressman Bernie Sanders and posted on his website. He told of the destruction caused by these plans. Mr. Sanders urged support for the George Miller Motion, which helps protect workers’ pensions from losses caused by cash balance plan conversions.
Mr. Speaker, I rise today in strong support of the Miller Motion to Instruct and I commend the Gentleman from California for his leadership on this issue. Mr. Speaker, pension anxiety is sweeping this country. Millions of American workers are worried that the pensions they have today will not be there when they retire tomorrow. And, with good reason. Unfortunately, over the past two decades, large corporation after large corporation have been breaking the retirement promises they made to their employees and that is wrong. Some companies are declaring bankruptcy so that they can break their retirement commitments. Other companies are freezing pension plans in order to slash the retirement benefits of older workers. And, over 300 companies throughout this country have slashed the pensions of their employees by up to 50% through cash balance pension schemes. Congress must tell corporate America in no uncertain terms that when they make a promise to workers about their pensions, they must keep that promise. That’s what this Motion is all about. Mr. Speaker, last December, the House passed a so-called pension reform bill that was hundreds of pages long. Included in that bill was an obscure provision to legalize age discrimination in cash balance plans prospectively. No floor amendments were allowed to strike this provision or offer any alternatives to it. Members were forced to vote up or down on the entire bill. But, the Senate did the right thing. In its bill, they provided important protections for older workers who would be negatively impacted by cash balance schemes. The Senate language is supported by the AARP, the AFL-CIO, the National Committee to Preserve Social Security and Medicare, the National Legislative Retirees Network and the Pension Rights Center. Today, unlike last December, we have an opportunity to do the right thing for American workers. We can and should instruct the Conference Committee to adopt the Senate language on cash balance plans. Mr. Speaker, there are some who support cash balance schemes. They argue that these plans benefit employees. Well, a couple of years ago, I asked the Congressional Research Service a simple question: what would happen if Members of Congress had their pensions converted to cash balance? The CRS answered this question unambiguously: every single Member of Congress they studied would see their pensions slashed under cash balance plans. Some, like the Speaker of the House, would see their pensions slashed by nearly 70%. Today, I would ask the opponents of the Miller Motion this question: if cash balance plans are so good for American workers, why not convert your own pensions into cash balance schemes? I asked this question a few years back in the Rules Committee, but the Republican leadership rejected my request to debate this issue on the floor. If you don’t like the CRS, what about the GAO? According to the non-partisan GAO, virtually ALL workers would lose up to 50% of their pension benefits under a cash balance conversion without the important protections included in the Senate bill. Finally, Mr. Speaker, I have offered three cash balance protection amendments on the floor and every time an overwhelming Majority of Members voted to support these amendments. In 2002, my amendment passed by 308-121. In 2003, my amendment passed 258-160, and in 2004 my amendment passed 237-162. By supporting the Miller Motion today, we would be doing what we have been doing in the past: voting to protect the pensions of older workers. I urge all of my colleagues to stand up for older workers. Support the Miller Motion to Instruct. House Approves Miller’s Cash Balance Motion
House Approves Miller’s Cash Balance MotionEmployee Advocate – www.DukeEmployees.com – April 18, 2006
House Democrats Win Vote to Protect Retirement Benefits of Older Workers House Approves Representative Miller’s Motion on Cash Balance Plans Thursday, April 6, 2006 WASHINGTON, DC -- The House of Representatives this evening approved a Democratic measure to help protect the pension benefits of older workers when their employers switch from traditional pension plans to so-called ‘cash balance’ plans. “This vote sends a clear message that when employers make promises to their workers, they should keep them,” said Representative George Miller (D-CA), the senior Democrat on the House Education and Workforce Committee, who offered the measure. “Pensions are not a gift from employers. Workers earn their pensions, and they should not see their retirement nest eggs devastated at the whims of their employers.” House and Senate negotiators are in the process of working out their differences on legislation to change the nation’s laws governing private pensions. Miller’s motion would instruct the House negotiators to agree to Senate provisions that would protect the pension benefits of older workers when their companies switch to cash balance plans. Cash balance conversions have often led to deep benefit cuts for older workers. The key reason for these benefit cuts is that the formula for calculating benefits in a traditional pension is often more generous than the formula for calculating benefits in a cash balance plan. In fact, in November 2005, the General Accountability Office issued a report that showed that half of all older workers (those 50 years old and older) lost benefits after their companies converted to a cash balance plan. Among those workers who lost benefits, the median benefit cut was $238 per month. In the 1990s, over 1,200 U.S. corporations – including IBM and AT&T – switched from traditional pension plans, in which workers receive a fixed monthly payment in their retirement, to cash balance plans. In general, cash balance plans pay a lump sum amount to workers at the time of their retirement or separation from service. They are often called “hybrid” plans because they include features of both traditional pensions and 401(k)s. Since 1999, there has been a moratorium on Internal Revenue Service approval of cash balance conversions. The Senate – by an overwhelming vote of 97-2 – voted to include provisions in its pension legislation that would help protect the benefits of older workers in cash balance conversions. The Senate legislation protects workers in two ways:
The AARP, AFL-CIO, National Committee to Preserve Social Security and Medicare, National Legislative Retirees Network, and Pension Rights Center all support these protections for older workers.
Xerox Loses Pension AppealEmployee Advocate – www.DukeEmployees.com – April 9, 2006The Second Circuit of the U.S. Court of Appeals in New York City denied Xerox’s request for a pension case to be heard again, according to the Rochester Democrat and Chronicle. The court ruled that Xerox changed the pension plan, but did not properly inform rehired employees that the changes would cost them years of service toward accumulating retirement benefits. Attorney David Tyler represented over 100 employees in the case. He said that Xerox owes the employees between $35 million and $50 million. In January, the court ruled that Xerox violated the federal Employee Retirement Income Security Act by reducing the pensions of rehired employees. The pensions of the rehired employees were reduced by the value of their original pension, plus interest! Class Action Bias Suit Against Xerox
Fleet Cash Balance Class Action Green LightEmployee Advocate – www.DukeEmployees.com – April 7, 2006Donna Richards, former employee of FleetBoston, can proceed with a cash balance plan lawsuit, according to the Associated Press. Not only that, but U.S. District Judge Janet Hall ruled that the case can move forward as a class action. Fleet Bank is now owned by Bank of America. Bank of America is infamous for introducing the first cash balance plan in 1985. Evidently, executives do not like to have their pensions taken away either. Plaintiff Donna Richards is a 57-year-old executive. Attorney Thomas Moukawsher said “Fleet designed a plan that was so complex many of those workers might not realize they were short-changed….She (Richards) has three master's degrees and she couldn't figure out how this plan worked and that is one of the things about cash balance plans is that they're extremely difficult for people to figure out."
Northwest Pension Fund InvestigationEmployee Advocate – www.DukeEmployees.com – March 16, 2006Northwest Airlines is under investigation by the Labor Department concerning its pension fund, according to the New York Times. The probe is to determine if Northwest Air systematically underfunded its pension fund, and then avoided making a $65 million payment by filing for bankruptcy only one day before the payment was due! This action may implicate other corporations also. As soon as one company finds a way to take the employees’ pension money, others line up for their share of the loot. Bankruptcies appear to be the biggest pension grabbing scheme since cash balance conversions. Labor officials want to know if corporate officials fulfilled their fiduciary duty by administering the plans "solely in the interest of the participants" in the pension plans. A number of pension plans are apparently administered solely in the interest of the corporate executives. Employees often forfeit their meger pensions, while executives reap millions of dollars in bonuses for their slick “management.” Northwest has partially complied with the subpoena, but wants to keep a number of document hidden. Northwest is pumping money to lobbyists, in an effort to get “special” pension laws enacted to cover it. The amount of pension skullduggery is not surprising. The Bush administration is big on “voluntary compliance” with the pension laws, and offering amnesty to offenders. How many more pensions must be wiped out before it’s realized that corporations cannot be trusted with pension money? Northwest has threatened not to cooperate with the investigation unless it is guaranteed that certain financial information will be kept secret and not be used against it! In G. W. Bush’s first two months in office he intervened to stop a strike at Northwest Airlines: Unions See Bush Moves as Payback for Backing Gore
$46.2 Million Pension Lawsuit WinEmployee Advocate – www.DukeEmployees.com – March 3, 2006Former AK Steel employees won a least a $46.2 million pension lawsuit settlement, according to the Associated Press. On Feb. 22, U.S. District Judge Sandra Beckwith ordered AK Steel to pay about $37.6 million in damages and $8.6 million in pre-judgement interest. The settlement will accrue post-judgement interest until it is paid. The lawsuit was filed in 2002, and charged that the lump sum pension payment had been miscalculated. Why do these “miscalculations” always seem to favor the corporations? AK Steel intends to appeal the ruling. Suit Claims Duke Energy Pension Changes Hurt Employees
What Ever Happened to All the Pension Money?Employee Advocate – www.DukeEmployees.com – February 21, 2006If you think pension funds are viewed as big piles of free money, with people looking for ways to get into them, you are absolutely right. That is exactly how executives view pension funds and that’s how politicians view them - free money for the taking. The Bush administration was running out of spending money, according to the Associated Press. It was going to hit the $8 trillion debt limit. Aren’t you glad we have debt limits on federal spending? We can only get a mere $8 trillion in debt with these limits! But these politicians are experts at weaseling around the system. As the debt limit approached, the administration simply started spending other money. Just what other money? On Thursday, the Bush administration told Congress it had begun using government pension funds to keep from hitting the limit! It just had to be pension funds! Yes, pensions funds are big piles of money to be used for any and all reasons – except actually going to the people who earned the pensions!
Attacking Executives’ Personal AssetsEmployee Advocate – www.DukeEmployees.com – February 6, 2006Executives often like to raid the pension fund, collect millions in bonuses, and sail away to Tahiti to spend their ill gotten gains. The executives and former executives hide behind the corporate veil and count their money. It’s worked great for years. A few hundred thousand dollars here and there to lobbyists and to political campaigns keep the ball rolling. But the federal Pension Benefit Guaranty Corporation (PBGC) may be going after the personal assets of Ira L. Rennert, according to the New York Times. Why should the PBGC pay the pension tab when Ira Rennert has a $185 million home, plus other assets? The PBGC is set to lay claim to Mr. Rennert's 29-bedroom oceanfront estate. But where would Mr. Rennert sleep if the PBGC took his house in the Hamptons? He could always sleep in his Park Avenue duplex, or perhaps his house in Israel. It’s about time! Let those who created the pension problems get off the hip to make up the shortfall. A relative few executives should not be allowed to live like kings off the pensions of their workers! Some executives raided the pension fund through cash balance conversions. Others just dumped their liabilities on the PBGC. But they all have one thing in common. They want to live lavishly at the expense of their workers.
Labor Dept Probes Pension ConsultantsEmployee Advocate – www.DukeEmployees.com – February 5, 2006Pension consultants, both those who advise investment funds and those who advise corporations on how to raid pensions, have been trying to turn invisible for years. The bulk of pension problem could not have occurred without their meddling, all for a cut of the action. The “action” was the employees’ pensions, often meager to begin with. Pension consultants do not want to face any accountability for their actions. The labor Department is investigating the pension consulting industry for possible conflicts of interest, according to Rep. Ed Markey, Rep. George Miller, and Reuters. In a statement, Rep. Markey said: "There is a crisis in the pension marketplace, and sweetheart deals cut by consultants and concealed from pension plans may be contributing to it." Some large pension consulting firms have been under investigation by the Security and Exchange Commission (SEC) for failing to disclose conflicts of interest. Reps. Markey and Miller pursued the matter with the SEC, Labor Department and the Pension Benefit Guaranty Corp. They wanted to know what actions were being taken "to detect and deter conflicts of interest and hidden financial arrangements that threaten the financial health of workers' pension plans." Labor Department officials replied on Thursday that several matters have been referred for further investigation. Now it's time to investigate those who are responsible for pension raiding by concocting various cash balance pension schemes. Cash balance plans provided a way to raid pensions and avoiding the penalties of existing laws. And, don’t overlook the CEO’s who paid the consultants to do the dirty work! Pension Consultants are in the Hot Seat
John Boehner is Death to PensionsEmployee Advocate – www.DukeEmployees.com – February 3, 2006After charges of money laundering and years of admonishments by the House Ethics Committee, Tom DeLay finally stepped down as the House majority leader. That was certainly good riddance. The problem is that the cesspool was dredged to find a clone to replace him – John Boehner (pronounced BAY-ner). Boehner owes his soul to very same lobbyists as DeLay. “Kickback Mountain,” published in The Nation, stated: “Boehner's been swimming for years in the same pay-to-play pool as DeLay…” John Boehner is bad news to employees who have lost pensions, due to cash balance conversions. Boehner is guilty of pushing for the retroactive legalization of these age discriminatory plans. He wholeheartedly supports the corporate ploy of taking money from employees’ pensions now and buying laws to cover it up later. With Congress infiltrated by the likes of Boehner, laws to paper over past illegalities are on sale 24 hours a day. Boehner has said "We're going to have a pension bill regardless." Beware the “pension reform” bill. Remember, under the current administration, “reform” is a code word meaning: “to take from employees and citizens and give to corporations.” John Boehner parrot’s the exact words of corporate pension lobbyists. As House majority leader, is will be so much easier for Boehner to deliver the goods to corporate America. He will be able to use the same tactics that Tom DeLay used to pass the infamous Medicare bill. He can hold an unfavorable vote open for hours and browbeat congressmen to vote his way. Democracy Crumbles Under Cover of Darkness An alleged $100,000 bribe, offered on the floor of the House of Representatives, also helped smooth the way for the Medicare bill passage. $100,000 Bribe On the House Floor? These comments about Boehner were published in the Washington Post: “He handed out checks from tobacco lobbyists on the House floor in 1995 while lawmakers were weighing tobacco subsidies. In 2004, he allowed Sallie Mae to throw him a fundraiser while the student lending outfit was lobbying his committee. And he is a frequent flier on trips paid for by special interests.” Boehner is trying to sell himself as a reformer, who will clean up the House. There is no doubt that he has a lot to “sell” and that he will “clean up.” Just remember what “reform” means to this administration.
401(k) Retirement Lawsuit SettlementEmployee Advocate – www.DukeEmployees.com – January 28, 2006In November of last year, Williams employees won a $55 million 401(k) settlement, according to Tulsa World. Plaintiffs charged that Williams Cos. misled them about the retirement plan. Current and former employees filed the lawsuit in 2002. U.S. District Judge Terence Kern defined the phrase that pension laws are "ever-evolving and complex." He said it "basically means very few people understand it, and those who do should probably be put in a home somewhere." A Williams spokesperson wrote: "We're pleased to have the matter resolved." It’s good that Williams is pleased. Over the coming months, many more corporations may also get the opportunity to be pleased to have resolved their illegal pension actions. Corporations Fear Cash Balance Pension Lawsuits
Corporations Fear Cash Balance Pension LawsuitsEmployee Advocate – www.DukeEmployees.com – January 27, 2006Large corporations have profited by taking billions of dollars from their employees’ pensions, through cash balance pension conversions. For a time, executives were as happy as fat ticks, from all the blood sucked from their workers. But now they fear facing the consequences of their unethical actions. Corporations are sending waves of lobbyists to Washington. They want Congress to save them from cash balance plan lawsuits, according to Bloomberg News. There are two ways to avoid lawsuits. First, do not break the law. Many executives do not like this option at all. When it comes to money, they prefer to just break the law and hope that they do not get caught. If they do get caught, money is thrown to lobbyists to get the laws retroactively changed. If pension laws were not broken, it would not be necessary to try to buy new laws! Supreme Court Age Discrimination Suit Green Light
Hands Off My Pension!Employee Advocate – www.DukeEmployees.com – January 14, 2006It is devastating when employees lose their pensions after a lifetime of working to earn them. It is a double whammy when they lose their pensions and retirement health care. But some employees face a triple whammy:
The Flint Journal told the story of dying General Motors foundry worker Gary LeClair. He is dying from exposure to asbestos, but fears that General Motors wants his life AND his pension. 1,000 union members met with U.S. Rep. Dale E. Kildee and U.S. Sen. Debbie Stabenow Thursday night to talk about pensions. Many wore large yellow "Hands Off My Pension" buttons. Mr. LeClair told lawmakers "I'm a dead man walking, and they want to take my pension from my wife and kids. We are people here. We are not numbers." Rep. Kildee told the crowd "Your pension does not belong to the company. Your pension does not belong to the stockholders. Your pension belongs to you." Sen. Stabenow said that Autoworkers shouldn't have to gather to discuss the future of the pensions. She said "Where are we in America? It's our way of life that is at stake." The current pension legislation being debated could go either way. All the lawmakers claim that they want to protect pensions. But some are owned, body and soul, by corporations. They will do anything to help corporations evade keeping their pension obligations. Corporate lobbyists live with these lawmakers and instruct them on how to vote. Some lawmakers do not know a pension from a grapefruit, but they know how to follow orders from the lobbyists. They know that as long as they follow orders, they will not risk offending the corporations and the contributions will keep rolling in. The worst of the lot is Rep. John Boehner. Under the guise of saving pensions, he wants to destroy pensions. He wants to save executives from the bother of actually meeting their obligations to employees. It is fitting that he wants to take over the position of House majority leader and replace scandal plagued Tom DeLay. Who would be able to tell the difference? Rep. Roy Blunt also wants to be the new Tom DeLay. But he and John Boehner are caught in the same lobbying quagmire as Tom DeLay. A Bloomberg report stated: "Representative Chris Shays, a Connecticut Republican, said he believes that Boehner is even closer to lobbyists than Blunt." Blunt, Boehner Share Lobbyist Ties with DeLay The Nation Stated: "Boehner's been swimming for years in the same pay-to-play pool as DeLay and Blunt." It is the fault of Congress that pensions are in such a sorry state. Congress made it easy for corporations to underfund pensions. But underfunding is only part of the problem. Boehner uses underfunding as a diversion, while he tries to retroactively legalize cash balance plans. Illegal cash balance plans were a problem long before corporations started skipping their responsibility through bankruptcies and freezing pensions.
Supreme Court Age Discrimination Suit Green LightEmployee Advocate – www.DukeEmployees.com – December 28, 2005A U.S. Supreme Court ruling has made it easier to sue for age discrimination, according to Knight Ridder. Attorneys are now warning corporation not to unwittingly discriminate against older employees. Unwittingly discriminate? What about blatant, willful, arrogant, in-your-face age discrimination? What about corporations who take money from senior employees’ pensions and boast that the reason is to better cater to “the young, mobile employee”? Why not just put up a neon sign, flashing: “Age Discrimination Practiced Here!”? What about corporations who outsource whole departments, where virtually everyone is over age 40? Attorney John Susany said “Any time you fire or lay off a person who is over 40, that person is a potential litigant against you. If most of your workforce is over 40, you've got a lot of potential plaintiffs.” Mature Services Vice President Paul Magnus said that failing to invest in older workers, as in younger ones, may also constitute age discrimination. $314 Million Pension Settlement
House Passes H. R. 2830Employee Advocate – www.DukeEmployees.com – December 16, 2005The Pension Rights Center said the House passed the bad pension bill, H.R. 2830, on Thursday. It is not over. The bill must now be merged with the less harmful Senate version. Be prepared to flood Congress with protests against the bad provisions of the bill. To Congress From the Pension Rights Center
Sign Me UpEmployee Advocate – www.DukeEmployees.com – December 7, 2005Progress Energy wanted to eliminate 450 jobs and made an early-retirement offer, according to the News & Observer. Progress did not expect that it would get 1,447 takers! The early retirees are receiving five extra years of pension benefits! That’s a new twist. Usually employees only lose pension benefits, while the executives are credited with extra years of benefits. North and South Carolina workers are receiving four extra months of salary to achieve retirement parity with Florida workers. Many of the retirees are vested in insurance plans and will receive health-care benefits for life. Duke Energy once offered the same deal, but Duke’s deal turned out to be phony. One new retiree said that Progress executed the early-retirement program with such precision that it will actually improve company performance. Many other companies botch their retirement programs so badly that employees seethe with resentment for decades.
The ‘Pension Reform’ BillEmployee Advocate – www.DukeEmployees.com – October 13, 2005The words “Pension Reform” conjure up an image of making pensions better. It is no accident that the current administration labels each attempt to rob American citizens as some sort of “reform.” Tort Reform was an effort to deny citizens the right to sue a corporation. Medicare Reform was an effort to reduce health benefits. Social Security Reform was an attempt to reduce guaranteed federal retirement benefits. Be aware that a number of senators and congressmen want to destroy the corporate pension system. These corporate toadies want to retroactively legalize the pension theft that has already taken place. They want to retroactively legalize the atrocities of cash balance pension conversions. They want to deny employees the right to sue for age discrimination that has already taken place. The only thing slowing down the passage of the “Pension Destruction Bill” are the congressmen and senators unwilling to let this sellout to corporations stand. Employees are not required to participate in the legislative process. In fact, those wishing to confiscate the pensions of working Americans hope that employees do not participate in the process. Untold millions of dollars have been thrown at lobbyists by corporations in an attempt to legalize cash balance plans. The last thing the executives want is for employees to exerciser their right to contact their elected officials. If enough citizens demanded that corporations be forced to obey the laws as written, the millions spent on lobbyists would be for naught. The vote on the Pension Reform Bill had been delayed. On Monday, October 17, the bill may be voted on, but it will more likely be revived in January, according to BNA Pension and Benefits Reporter. Sen. Grassley said that the DeWine-Mikulski amendment would dig a deeper fiscal hole. He said "That's probably why they didn't want to vote on it today, but instead wanted to wait for big business lobbyists to drum up more support…Big businesses say they can't afford to put money in their pension plans but they've had no problem handing out huge salaries and special retirement plans for their executives…Congress has to say enough is enough." In a statement, Sen. Baucus said: "The need for our bill was made even clearer by reports that Delphi [Corp.], with billions of dollars of underfunding in its pension plans, has given new golden parachute agreements to its executives. I will continue to push for legislation that makes funding workers' pensions a priority. I don't want to pass a bill that masks the real cost of benefits. That leads to broken promises. Workers deserve to receive benefits they have earned." That’s the problem. For too long, executives have effectively helped themselves to the employees’ pensions. Now that that they have been exposed, they are trying to get their sorry actions retroactively legalized.
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