DukeEmployees.com - Duke Energy Employee Advocate
Pensions - Page 6 - 2003
with a predictable, secure benefit for life." - David M. Strauss, Executive Director PBGC - 1998
Congress Zeros In On Cash Balance PlansEmployee Advocate – www.DukeEmployees.com – December 10, 2003
In November, cash balance plans suffered a setback in Congress, according to CBS.MarketWatch.com. The Bush administration’s attempt to legalize cash balance plans was thwarted by an amendment to the appropriations bill.
Not only was the Bush administration blocked from making cash balance plans legal, the amendment requires remedial action. The administration is required to propose legislation addressing how to make restitution to older workers who lost pension benefits because of cash balance plan conversions!
People are finally catching on to the real purpose of cash balance plans. The MarketWatch article stated “Employers generally switch to cash-balance plans from traditional defined-benefit plans to save money.”
Saving money means taking money. The money is taken from the employees’ pensions. All other reasons are bogus. They were invented by management consulting firms as a smokescreen. The world is wise to cash balance plans, and so is Congress.
Even the American Benefits Council, a shill group for corporations, knows the jig is up. Lynn Dudley, ABC senior counsel, said companies must “evaluate whether the risk of maintaining their plan is a risk they want to carry. That risk could be relatively high given the ... controversy these plans have been experiencing legislatively and judicially."
Ms. Dudley made the usual empty threat that if employees did not like cash balance plans, then they would get no retirement benefits at all. Jeff Weaver, Congressman Bernie Sanders’ chief of staff, shot her down.
Mr. Weaver said “That's the scare tactic that companies always use. 'If you don't let us cut their benefits, we won't give them the benefit at all.’ That's the scare tactic we always hear, and it's always false. ”
Mr. Weaver added that the plans “are illegal under current law ... because older workers accrue benefits at a slower rate than younger workers, and that's illegal under federal anti-age discrimination law. When companies implement these things, they do it to save money. Money is saved because older workers get less money. It's not much more complicated than that.”
‘Ole MacDonald was a Liar’Employee Advocate – www.DukeEmployees.com – November 14, 2003
It is fun to watch some executives get nailed by the law. They will scream, yell, cry, and beg. Randall J. MacDonald, IBM senior vice president human resources, always puts on a good show!
Ole MacDonald’s latest antic was to blame Congress for IBM failures, according to the Wall Street Journal. Why blame Congress, because IBM got caught plundering pensions? Ole MacDonald blames Congress, because it will not let IBM off the hook for depriving IBM employees of their earned pensions. Look! Ken Lay gave the Bush administration more donations than IBM. But when Enron went too far, lay was on his own.
Actually, the Bush administration tried to get IBM off the hook, but Congress intervened. Both houses said that Bush could not overturn a federal ruling against IBM through “loose” Treasury rules.
Ole MacDonald issued a prepared statement: “Congress's action preventing the issuance of appropriate regulations for employer-insured pension plans puts the future of these plans at great risk… The protection that was once afforded to employees under defined-benefit plans, including the protection afforded through government, will be lost as companies migrate to plans run by individual employees.”
What if a robber takes all of a person’s money. Then the robber threatens to rob the victim if he reports the crime. That makes as much sense as ole MacDonald’s statement!
IBM had already taken half of some employees’ pensions. A federal court ruled that the IBM cash balance plan was age discriminatory. Congress will not allow Bush to help IBM skirt the law. So, ole MacDonald made threats of pension loss! Ole MacDonald said that the actions of Congress has put “the future of these plans at great risk.” What does he mean future? Corporations have been destroying pensions by converting them to cash balance plans for years! Ole MacDonald said if employees use the legal protection afforded them to claim their deserved pensions, they will lose the protection! These are the most lame, empty threats possible!
IBM and Duke Energy are only two of the companies attempting to fatten the bottom line at the expense of employees. The employer lobbyist groups have been parroting the same threats.
If Congress would come down hard enough on cash balance plans, you could not pay a corporation to convert to one. Corporations will take advantage of “free” money only as long as they can get away with it.
What would happen if corporations were forced to return all of the retirement money to employees? What would happen if appropriate fines were levied? What would happen if the perpetrators were given stiff prison terms? There would be CEO’s standing on the street corners, preaching against the evils of cash balance plans!
When the tide turns, corporations will bail out every time. Have you heard of any CEO saying that he wants his company to be like Enron, lately?
Ole MacDonald may have a future as stand-up comic. It is debatable how much longer he will be in the HR business.
Ole MacDonald’s statements make one want to burst forth in song:
E - I - E - I - O
He lied so much his pants caught fire
E - I - E - I - O
Ole MacDonald reduced the pension
IBM was busted in court
Ole MacDonald came unwound
Read about previous antics of ole MacDonald:
The Power of the PeopleEmployee Advocate – DukeEmployees.com - September 30, 2003
Ralph Nader cited the public demand for relief from annoying telemarketers as an example of the power of the people over corporate interests. His article, “Answering the Call,” is posted on www.tompaine.com.
50 million people were disgusted with sleazy telemarketers invading their privacy, and were listed in the federal "do not call" registry.
The registry had strong congressional support from the beginning; 98 percent of Congress voted to fund a registry, in February. Lee R. West, federal district court judge, was foolish enough to step in front of this speeding freight train. He ruled that the FTC did not have the legal authority to set up the registry. The judge was standing on the tracks with his mouth open, when the train made impact. He is now being scraped off of the tracks.
Congress immediately passed an act that nullified the judges’ ruling. The Senate approved the act by 412 to 8, the House by 95 to 0! The act is going to be immediately signed into law.
The judge attempted to save the corporate telephone solicitors by interpreting an existing law. But when 50 million people do not like a law, the law can change – and change fast. The judge defied the will of Congress and 50 million Americans, but not for long.
The telemarketing industry is powerful and spreads campaign contribution around Congress. It was overwhelmed by the vote. The members of Congress love campaign donations, but they also know that the public has the voting power to put them all on the street. When the public speaks loud enough, it will always prevail over corporate interests.
Millions of working Americans have lost serious pension money due to cash balance plan conversions. If these employees showed half as much concern about their retirement benefits, as has been shown about telemarketers, cash balance plans would instantly become extinct. The cash balance plan peddlers would be in the unemployment line, right beside the telemarketers.
Another Nail in the Cash Balance CoffinEmployee Advocate – DukeEmployees.com - September 26, 2003
The New York Times reported that the Financial Accounting Standards Board has discussed making changes that would eliminate many financial incentives to convert to cash balance pension plans. This is great news. Almost every day, these abusive pension conversion are being attacked from a new front.
The Board may force corporations that rip-off employees with cash balance conversion to report larger obligations than they are getting by with now. A big incentive for corporations to convert to cash balance plans is the ability to pay employees less retirement money and report less pension obligations. Even consulting groups that profit from peddling such plans are getting the drift.
Eric P. Lofgren, Watson Wyatt Worldwide global director, said “There's no two ways about it; the higher the liability, the less you're going to want to do it.”
When a federal court declared the IBM cash balance plan to be illegal and age discriminatory, it validated what employees have been saying all along. These plans were designed for the sole purpose of making a handful of people extremely wealthy at the expense of millions of American workers. For icing on the cake, the day after the IBM ruling, Xerox lost its cash balance payout appeal.
Corporations and their enablers have been getting away with such scams by keeping the details hidden and obscuring the facts at every opportunity. But the inequities of cash balance plans have been exposed to the degree that the truth can no longer be hidden. Each day more parties are distancing themselves from cash balance plans. Some corporations and consulting groups had a great racket going, while it lasted.
Expect a great lobbying effort from the pension parasites that promote cash balance plans. Every employee should send in their opinion when the comment period is open. If workers refuse to become involved in matters that directly affect them, the pension parasites win by default.
Mr. Lofgren boldly stated “I don't see how they can design something here that I can't find a way around.”
Cash balance plans are such a gray area that corporations have been doing about anything that they wanted to do with them for years.
James F. Verlautz is a member of the American Academy of Actuaries pension practice council. He said “There is nothing specific in the cookbook for how we handle cash-balance plans. So different actuaries had come up with different theories of how they ought to be handled.”
After using a hodgepodge of methods to design cash balance plans for years, the Academy of Actuaries decided to ask the Accounting Standards Board to approve one of the methods. Imagine their surprise when the board approve none of the methods! The Board specified a method different from any used by any actuary. One would hope that the board approved a method that does not rob employees, as most cash balance plans do.
Shed no tears for corporations that may have to report more pension liabilities. They are in this predicament by their own choosing. These corporations chose to exploit undefined areas of pension law as a way to raid the employees’ pension fund. If justice is truly served, prison sentences may be in order.