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April, 2000
 Join your fellow employees who are fighting for your benefits - Join the Alliance! Retirees, Vendors, Contractors, Temps, and Active Employees are all eligible to become members of the Alliance. |
Highlights for week ending October 7, 2000
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Call to action from Janet Krueger: Please give both your senators one more call this week. Tell them you're still VERY concerned about whether congress is legalizing cash balance conversions. The following editorial clearly explains why the senate's actions legalize the conversions: http://paine.law.ou.edu/jforman/Opeds/TN10-00(cashbalance).htm Note that Prof Forman is well known as a commentator on pension and tax issues, has testified before Congress and has recently (August 2000) published another article on cash balance plans for a law journal. Prof Forman seems to agree they should be legalized; we believe they are illegal now, and WE DESERVE OUR DAY IN COURT!!! The key point to emphasize in the article is its title: 'Senate Finance Committee Gives Green Light to Cash Balance Conversions.' Ask what the status is of HR1102. Noone seems to know yet whether it will be brought up for a vote this week; if it does, we NEED the Harkin cash balance amendment. Repeat one more time how upset you will be if the bill gets snuck into one of the appropriations bills in a non-amended, unamendable form. (I've been warned this COULD happen if we don't make our positions 100% clear to our senators!) |
- CFO Magazine: FEATHERING
THE NEST EGG. Pension surpluses are a boon to corporate bottom
lines. But are efforts to expand them going too far? Excerpts: "Last
year, for example, when IBM converted to such a plan, one of the
company's engineers calculated that he would lose $212,000 when
he retired in 10 years after 30 years of service. "The purpose
of IBM's cash-balance plan conversion was to slash obligations to
employees, increase the pension plan surplus, increase the company's
operating income, and drive up its stock prices," says James
Marc Leas, an advisory engineer and patent lawyer at IBM's Burlington,
Vermont, semiconductor fabrication plant." "...largely
in response to the protests of employees at IBM and other companies,
a Senate panel, the Internal Revenue Service, the Equal Employment
Opportunity Commission, the Department of Labor, and the Pension
Benefit Guaranty Corp. are all in the process of reviewing cash-balance
plan conversions to determine if, among other things, they violate
U.S. age-discrimination laws."
- Lou
Shadow comments on the presidential debates, and provides a news
article from Computer Daily News on possible industrial action (a
strike) by IBM Global Services employees in Australia.
- IBM has been soliciting former employees to return to the company.
Janet
Krueger provides advice if you're a former employee considering
returning to IBM. Janet references a story
in the Sunday New York Times that describes a horror story for
a returing Xerox employee.
- A
new IBM shareholder proposal is in progress, this one focusing on
executive compensation. Janet Krueger says "I am now convinced
that IBM's main motivation in denying COLAs to retirees is the fact
that they have been successfully boosting their earnings/share with
vapor profits from the surplus money in the pension fund. The fact
that IBM's top executives have their bonuses directly tied to earnings
per share, which is then tied to pension fund surpluses, makes it
even less likely that they will ever be voluntarily pay out any
of the pension fund surplus (currently valued at 17 billion dollars)
with retirees in the form of a COLA." "Business Week (4/24/00)
said IBM was "padding the profits" with pension fund money. In a
cover story, "Earnings Hocus-Pocus at IBM," Fortune Magazine (6/26/00)
described pension fund earnings and said IBM's "bag of accounting
tricks won't satisfy" and "investors will get tired of the illusion
of growth and demand the real thing." The New York Times (6/4/00)
said "obfuscation is the name of the game" for IBM."
- Janet
Krueger explains that there will be two employee-sponsored shareholder
proposals for next year's IBM Shareholder's Meeting
- Retirees
receive letters stating they must contribute money toward medical
coverage starting in 2001
- Jonathan
Forman, University of Oklahoma College of Law, Norman, Okla., discusses
the Senate Finance Committee's approval of eliminating early retirement
subsidies in cash balance pension plan conversions. "Simply
put, replacing a traditional pension plan with a cash balance plan
will reduce the expected pension benefits of older workers. As a
result, older workers can see their future pensions cut -- in some
cases deeply. These workers can get the worst of both plans -- the
lower early accruals provided by the traditional pension plan and
the lower late accruals provided by the cash balance plan. Worse
still, after some cash balance conversions, some workers will see
no increase in the value of their retirement benefits for several
years. This result has been dubbed the 'wear away' (or 'benefit
plateau'), and it is one of the most contentious features of cash
balance conversions."
- CPR
advocates a letter writing campaign to the Smithsonian concerning
Mr. Gerstner's future
- A
story about Lou Gerstner from CPR
- A
less-than-5-year IBM employee in Atlanta talks about work expectations
in IBM Global Services
- Forbes: Not
a Drop to Drink. "The most successful industry in history
can't shoot straight when it comes to hiring. High-tech employers,
complaining of a desperate shortage of software developers, are
lobbying Congress to increase the number of foreign workers brought
in each year on H-1B visas. Yet employers reject the vast majority
of their applicants for programming positions without even an interview.
Many of those rejects would be highly productive workers."
- Forbes: Ellen
Hancock, former IBM executive (and "hanger-on'er), is now CEO
of the top Web hosting company in the world. Good job Ellen!
- CPR
comments on the appeal of 44 to 60 year old IBM employees to IPO
companies, and on the going price of an IBM Notes telephone directory.
- WASHINGTON --- US. Representative Rob Andrews (D-NJ-01) and U.S.
Senator Tom Harkin (D-IA) today released a General Accounting Office
(GAO) report urging the Internal Revenue Service (IRS) to stop the
approval of Cash Balance Pension Plans until the Department of Labor
and the Department of the Treasury can complete a full review of
these plans and their effects on American workers' retirement benefits.
See
full press release.
- IBM
Retirees receive letter from head of IBM HR stating, among other
things, that "many 'large' companies no longer provide medical
benefits to retirees and most of the technology companies that IBM
competes with do not provide medical benefits to either employees
or retirees." Full text of the letter: Part
1, Part
2.
- News of changes to IBM Retiree medical plan won't be released until February, 2001
- Some speculation on why IBM is waiting until February to announce details of the change. (Changes are usually announced in October). See also.
- CPR's comments on the situation. Extract: "It now appears that one of the elements of that strategy is the final theft of benefits to retirees and to 1st and 2nd choicers. Obviously, the slow process of enactment of HR1102 and the public resistance this board and others have magnificently done with limited resources has stopped that TEMPORARILY. This ties in with the blatant disregard for ERISA law allegedly displayed to many witnesses here by the IBM HR staff. We firmly believe they are counting on HR1102 passing and instantly immunizing them for all the despicable, illegal actions and questionable activities done in IBM's name during the last 18 months. There is no fear of legal or criminal reprisal, no concerns. They think they can even get out of the active 100+ EEOC cases filed against IBM."
- Lou
Shadow provides a "class assignment" of interest to
retirees (or those of us that hope to retire someday!).
- The American Bar Association and Cash Balance Plans.
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News from the United Kingdom
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