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    Highlights—August 26, 2006

  • National Public Radio's On Point: Your Pension. Aired: Monday, August 21, 2006 11-12PM ET. By guest host John Hockenberry. Excerpt: Do you open your pension junk mail -- the yearly fliers that talk about how you are doing? There's a box for how much you've put in - generally a demoralizingly small number; a box for how much your pension will grow in 40 years - usually a large number; and then a box that predicts how much you will get each month if you make it to retirement age and keep contributing like you're doing - usually a reassuring number.
    Well surprise -- the do-nothing 109th Congress has passed a landmark pension reform bill. Does it make your pension more secure? Or should there be a new box warning: By the way you could end up with nothing. Hear about the newest pension reform bill and pension anxiety.
    • Theodore Francis, staff writer for The Wall Street Journal
    • Teresa Ghilarducci, national expert on private pensions, professor of economics and director of the Higgins Labor Research Center at The University of Notre Dame.
    • Zvi Bode, professor of finance and economics at Boston University School of Management.
    • Edward Ferrigno of the Profit Sharing 401K Council of America.
  • Investments and Pensions Europe: IBM trustee tells of battles with company. Excerpts: A former member-nominated trustee at IBM’s £4.9bn (€7.2bn) UK pension fund says he feels the computer giant made his role more difficult through a lack of information. “Essentially, MEDs [Member Elected Directors] need not only to learn about pension regulations and about the schemes, they also have to battle an organisation where the chairman's powers and the deprivation of information are used to hinder MED effectiveness,” says Brian Marks.
    Marks, a trustee from 2003-2006, writes in an account of his tenure that he anticipated “being stifled by a lack of information” when he took the role. Marks cited examples of being underinformed at meetings and about employees. Marks claims the company denies MEDs access to the pensions part of its intranet. “An obstruction that I did not anticipate arose when I wanted to analyse scheme data,” Marks said. He maintains he was refused access to a copy of data sent by IBM to its actuary Watson Wyatt. [...]
    Marks was also critical of having US executives “flying-in” for trustee board meetings. The disparity in salaries and cultural differences was a problem – meaning the visitors were “not equipped to be trustees of a UK scheme”. Last year Marks and others penned a guide for other IBM member trustees which said: “The biggest frustrations from being an MED stem from the gap between the objectives of the trust and the objectives of IBM.”
  • Newsday: Pensions are going, going...Increasingly, employers are giving workers responsibility for their own retirement plans. By Tami Luhby. Excerpts: Tony Mastrogiovanni might have earned more in another job, but he chose to join AT&T more than three decades ago because of the great benefits, particularly the pension plan. He wanted the comfort of steady income in his golden years. Now that he's left AT&T, he's getting a much smaller check than he had expected. That's because when AT&T decided in 1997 to convert from a traditional "defined-benefit" pension plan to what's known as a "cash-balance" plan, his estimated annual retirement payout at age 55 was slashed from $44,000 to $26,000. [...]
    Conversions from traditional to cash-balance plans quickly encountered charges by older employees that the plans were discriminatory because they reduced expected benefits for workers approaching retirement. Furious that the rules were being changed in mid-career or even later, employee groups from several companies, most notably IBM, sued to challenge the legality of the plans. Conversions essentially stopped in 2003 after a federal district court judge ruled in favor of the workers; the ruling found that IBM's cash-balance plan was discriminatory and illegal. Subsequently, IBM agreed to pay $320 million to settle part of the class-action lawsuit and, if the ruling were upheld on appeal, to pay up to an additional $1.4 billion.
  • Yahoo! message board post by Kathi Cooper. Excerpts: I only worked for IBM for 26 years and was a manager during part of that time too. I tried hard to do everything I could for my employees too. I retired at 55 because I wanted to secure my pension the first minute of availability. [...]
    I want everyone I know to continue their careers too. Around 100,000 jobs of our colleagues have been transferred to India. I feel bad for the ones that have lost their jobs. India does not offer any benefits so we can't root for them, but we can root for those on this continent and see that IBM does them well. [...]
    Gerstner joined IBM on April Fool's day, 1993. Instead of breaking up the company, he dismantled our pensions then proceeded to do the same to our medical. Ask anyone on this board about how much they enjoy their free medical.
    I've said it hundreds of times. I love IBM but it's like waking up one morning and discovering your kids are on crack. You will do anything to fix the problem, because you love them. It's not about being pro or anti IBM. It's about coming to terms with the damage that our beloved IBM has done to us.
News and Opinion Concerning U.S. Court of Appeal's Overturn of Cooper v. IBM Decision
  • MarketWatch: Plaintiffs ask full court to review IBM pension decision. By Jilian Mincer. Excerpts: Plaintiffs Monday asked the federal appeals court in Chicago to hear again a high profile case that had exonerated the International Business Machine Corp.'s (IBM) cash-balance pension plan. On Aug. 7, three of the appellate court judges ruled that the plan does not discriminate against older workers. On Monday, lawyers representing certain IBM workers filed a petition "en banc," which asks all 11 active judges on the bench to review the opinion. If the appellate court rejects the petition, the plaintiffs could appeal the case to the U.S. Supreme Court.
  • Yahoo! message board post by Janet Krueger: Full excerpt: The motion requesting a rehearing was filed today. I uploaded it to the FILES area of this board as: Cooper-Petition Rehearing 8-21.pdf Interesting reading!
  • Poughkeepsie Journal: Plaintiffs: Review IBM ruling Workers want new look at pension plan. By Craig Wolf. At stake is nearly $1.4 billion IBM would have to pay in addition to $318 million already agreed to in an earlier settlement between the company and the plaintiffs. The class-action suit affects about 140,000 people, several thousand of them present or former Hudson Valley residents. If the court rejects the call for the whole-panel review, called "en banc," the other avenue remaining would be an appeal to the U.S. Supreme Court, said Janet Krueger, an ex-IBMer who has long been an activist for employee rights. The petition for review asserted the ruling conflicted with two of the court's decisions in similar cases.
    "Rehearing en banc is necessary to correct the panel's errors on issues of great national impact and to secure and maintain uniformity of this court's decisions," the petition said. "We haven't reviewed the petition, but IBM is confident that the appellate ruling will be upheld," IBM spokesman Edward Barbini said. Kruger said her research finds only two cases in the last year in which parties losing an appeal sought an en banc review. The court granted neither. [...]
    The employees must wait for the appellate court to decide before they can go to the Supreme Court, Krueger said.
    The petition for review said the three-judge panel "changed the law" by holding there is no difference between the pension law's age discrimination standards for the two types of pension plans, called "defined benefit" and "defined contribution."
    At issue is a hybrid version of pension called "cash balance." The panel chose to apply the age discrimination standards that pertain to defined contribution plans, and from that stance, ruled IBM had not discriminated.
    The petition rejects the panel's view that the two types of plans "appear to say the same thing" and said the court should find as it did in earlier cases that a cash balance plan was more like a defined benefit plan. They say if this had been done, the ruling would have favored the employees. "We think we've got really good grounds," Krueger said.
  • The Journal News (Westchester, Rockland and Putnam Counties in New York): Plaintiffs in IBM pension case ask for judges' review. By Julie Moran Alterio. Excerpts: Although it is rare to be awarded a rehearing after an appeal, the plaintiffs are arguing it is necessary because the appellate decision confused federal laws governing traditional pension plans and newer models such as 401(k) plans. "We think we really have a good argument. This opinion contradicts a whole set of prior opinions," said pension activist and former IBMer Janet Krueger, who is acting as a spokeswoman for the IBM employees certified as a class for the case. "We'd really like it if they would agree to a rehearing. We think the law is on our side if they would be willing to do that," she said. [...]
    The new pension law just signed by President Bush legalized future cash-balance conversions but didn't address existing plans such as IBM's. IBM has eliminated pensions for new hires in favor of beefier 401(k) plans and will freeze all U.S. pension plans by January 2008.
News and Opinion Concerning the Pension Reform Bill
  • Chicago Tribune: Beware of fees as new pension law takes hold. By Gail MarksJarvis. Excerpts: But if you make a practice of giving your retirement savings a little more attention, you will have to keep an eye on potential changes that could interfere with your investments' earning power in the future. I'm talking about fees. With the passage of the new law, benefits staffers at employers throughout the country are busy making changes in 401(k) plans. With potentially $1 trillion of new business in the making, brokers, insurance salesmen, financial planners, independent money managers and mutual fund companies all are pitching packages of new 401(k) investment options to these benefits staffers. [...]
    Some changes will include investment education for employees and mutual funds that put employees automatically into mixtures of stocks and bonds appropriate for their age. But with some of these plans, fees could be excessive--stripping investors of some investment returns. That's where your attention will be warranted. Fees can seriously erode your hard-earned investing dollars. And often benefits staffers, who make decisions on 401(k) choices, do not fully understand their impact.
    Fees are so significant that a young investor could give up close to a half-million dollars, or more, over a lifetime of investing--simply by overpaying 401(k) expenses, said Chicago financial planner Chris Long.
  • Workforce Management: Teamsters Keep Up Fight After Pension Bill Signed. Even though Congress has approved major pension reform legislation and President Bush has signed it, the Teamsters union still hopes to delete a provision from the bill that would eliminate early retirement benefits. Excerpts: The union is upset about so-called "red zone" rules that would allow multiemployer pension plans that are less than 65 percent funded to cut back on "early out" benefits that have been earned by truck drivers, carpenters and other laborers. The change must be approved through collective bargaining, but the Teamsters say that companies will maintain the upper hand in negotiations. Under current law, the plans can change early retirement rules for future years. But they must pay participants the amount of money they have already earned by the time the plan was revised.
    Union members charge that Congress is taking away benefits that were negotiated as if they were wages. "Allowing employers to cut an already earned benefit is unprecedented, unfair and unnecessary," says Frank Bryant Jr., a member of the Central States Pension Improvement Steering Committee. "What Congress wants to do now is come into our bank account and withdraw our money." [...]
    In a letter to Sen. Edward Kennedy (D-Massachusetts), he wrote: "We were shocked that you would have been so unresponsive to 1.4 million Teamsters who depend on the earned pension benefits that you and your fellow Members of Congress are allowing to be taken from us. This feels like theft. You’ve always done right by workers and we ask that you come back to our side on this issue." Bryant asserts that Kennedy and other legislators were influenced by corporate donations. "It’s a shame that our elected representatives are up for sale."
  • CFO.com: Pension Act Tilts to Cash-Balance Plans But employers still might want to shun old-style defined-benefit plans for the comfort of a 401(k). By David M. Katz. Excerpts: By boosting the volatility of the cash demands that traditional defined-benefit plans place on employers, the new pension reform law makes cash-balance plans all the more alluring, retirement plan experts say. Indeed, some foresee a sizable up-tick in the number of conversions from old-style pension plans to cash-balance programs. A major reason is that the Pension Protection Act of 2006 reins in employers' ability to "smooth," or average over time, the interest rates used to gauge the assets and liabilities of traditional pensions. Before President Bush signed the act into law on August 17, plan sponsors could smooth the interest rates they used for assets and liabilities over five years and four years, respectively. The act changes smoothing to a two-year time period for both. [...]
    Still, many defined-benefit plan sponsors worried about volatility might still be wary of moving to cash-balance plans if the act hadn't made them so appealing. After all, hybrid plans had been in hibernation since 2003, when a federal judge ruled in Cooper v. IBM that the company showed a bias against older workers by converting from a DB plan to a cash-balance plan.
    But barely ten days before the new law was enacted, an appeals court overruled the previous decision. "An employer is free to move from one legal plan to another legal plan, provided that it does not diminish vested interests," the appeals court judge for the Seventh Circuit ruled. Experts feel that the decision sets a precedent in favor of existing cash-balance plan conversions that may hold sway in other circuits.
    Soon after, the pension act erased all doubts about future conversions by making the design of cash-balance plans legal. Now, employers mulling a conversion know that "it's not something they're going to get penalized for after the fact," says Jonathan Waite, chief actuary for SEI, an outsourcer of asset-management services.
  • Dow Jones Newswire: Pension Economics Point to More Freezes. By Steven D. Jones. Excerpts: I believe we will witness an unprecedented number of companies closing their well-funded defined-benefit pension plans to new employees," said James Klein, president of the American Benefits Council, in a statement. Verizon Communications Inc., Motorola Inc., Hewlett-Packard Co. and International Business Machines Corp. have recently announced freezes of their defined benefit pension plans. Delta Air Lines Inc. and Northwest Airlines Corp. also have imposed freezes as part of their reorganizations in bankruptcy court. [...]
    For companies, there are clear economic benefits to freezing a pension plan. Jack VanDerhei, professor at Temple University and a research director at the Employee Benefit Research Institute, has analyzed pension freezes and estimates a hard freeze can cut the annual retirement payout to a worker by more than half.
    Payments to many pensioners are calculated using a "final-average defined benefit" formula. That means the company multiplies the number of years worked by the average of the worker's three highest years of pay times 1 percent. Suppose a worker retires at 65 after 35 years on the job with a final three years of pay averaging $103,000 a year. His benefit would be $36,000, or $103,000 times 35 years times 0.01. If the retiree survives to age 85, the total benefit paid would be $720,000.
    But consider what would happen if the company had frozen the pension plan when the worker was age 50 after he had put in 20 years on the job. Suppose his average salary the final three years before the freeze was $70,000. That means at age 65 when he retired his benefit would be $14,000, or $70,000 times 20 times 0.01.
    That's $22,000 a year less than he would have received without the hard freeze. And if the retiree survived to age 85, the total amount of the benefit would be $280,000, or $440,000 less than the total benefit paid had the pension not been frozen. [...]
    The 50-year-old worker whose pension was frozen in the example above would have to begin putting aside nearly 13 percent of his salary annually for 15 years to make up the $22,000 gap created when his defined benefit plan was frozen.
    A worker with an established 401(k) or individual retirement account would be ahead of the game, but those who don't have a nest egg will face some tough choices. Saving 13 percent of salary at the same time such a worker is likely to be paying for college for the kids will be a tall order for the average wage earner. "Realistically, he is going to end up working longer if he wants to maintain the same lifestyle," said James Lange, a Pittsburgh CPA and author of "Retire Secure," a book advising retirees on methods to make their money last as long as they do.
  • Newsweek: Your Retirement: How to Land On Your Feet. By Jane Bryant Quinn. Your golden-years lifestyle depends more and more on investing smarts, luck and timing. Time to understand the new risks, and develop a plan to deal with them. Excerpts: Steve Griggs was feeling flush. In a perfect, late-'90s bull-market moment, his investments reached $1.6 million, mostly from the Texas Instruments stock in his 401(k). High on his luck, he retired at 50 from his job as a TI manager—planning to have some fun, try new businesses and spend time with his ailing parents. Then ... well, you know the rest. TI plunged from $84 a share to $23, sending Griggs back to work. He now teaches special education in a Houston school and saves half his $38,000 salary to rebuild his nest egg. Griggs likes his job, but says, "If I had to do it all over again, I probably would not have retired."
    On his drive to school, Griggs might pass the Witkowskis, Kathleen, 61, and Ron, 53, tooling around town on their bikes. Retired for three years from technical jobs at Southwestern Bell, they garden, read, surf the Internet and practice their fox trot at a ballroom-dancing class. "We don't have to get up at 5 a.m. And we think nothing of staying up until 3 in the morning to watch a great movie," a gleeful Kathleen reports. Like Griggs, they invested their 401(k) entirely in company stock (SBC Communications), which is down a third in price. But they had a safety net: old-fashioned pensions, which they took as a lump-sum payout of $553,000. A financial planner diversified it into bonds and dividend-paying stocks to complement their cash savings and other income. Says Ron: "We're not worried at all." [...]
    Earlier generations faced retirement risks, too, when companies failed or inflation struck. But collectively, the system strove to minimize uncertainty. In 1972, Congress raised Social Security benefits by 20 percent; two years later it passed ERISA, the law that put guarantees under shaky company pensions. Contrast that with the "ownership society" hailed today. Guaranteed pensions are on the decline in favor of investment accounts, such as 401(k)s. The age for claiming full Social Security benefits is going up, which translates into smaller checks for those who retire at 62. (Current full retirement age: 65 and 6 months, gradually rising to 67 for people born in 1960 or later.) Increasingly, boomers will be expected to live on whatever money they've saved themselves. Winners will step around the losers on the street.
  • eWeek: Mainframers Learn New Tricks. By Darryl K. Taft. Excerpts: As a shortage of developers with mainframe skills looms over the industry, IBM and some of its partners hope to renew interest in the big systems through partnerships with universities, new programs, new tools, and support for modern languages and architectures. Motivating the move is that, while IBM's mainframe business has picked up, the work force of developers who write applications for the mainframe has dwindled, company officials said. Indeed, Geoff Smith, an IBM z/OS information strategist at the company's mainframe development lab in Poughkeepsie, N.Y., said that within 10 years, the IT industry will experience a decline in system programmer talent.
  • New York Times: The Rise of Shrinking-Vacation Syndrome. By Timoth Egan. Excerpts: “The idea of somebody going away for two weeks is really becoming a thing of the past,” said Mike Pina, a spokesman for AAA, which has nearly 50 million members in North America. “It’s kind of sad, really, that people can’t seem to leave their jobs anymore.” Shrinking-vacation syndrome has gotten so bad that at least one major American company, the accounting firm PricewaterhouseCoopers, has taken to shutting down its entire national operation twice a year to ensure that people stop working — for about 10 days over Christmas, and 5 days or so around the Fourth of July. “We aren’t doing this to push people out the door,” said Barbara Kraft, a partner at the firm in the human resources office. “But we wanted to create an environment where people could walk away and not worry about missing a meeting, a conference call or 300 e-mails.” [...]
    Company leaders at PricewaterhouseCoopers said they started their nationwide shutdown because people were not getting their batteries recharged. Now that the entire work force of about 29,000 takes a vacation, company officials say they are seeing positive results. “It has taught our people what it is like to have unencumbered time,” Ms. Kraft said.
  • System iNetwork: U.S. Fuels Increasing Demand for Outsourcing. Excerpts: The global market for offshore outsourcing continues to grow with little sign that it will be slacking off any time soon, according to a recent report by analyst group IDC. The offshore market continues to be "robust," the report states, despite problems such as lower employee productivity. By 2010, IDC predicts, the offshore outsourcing market will reach $29.4 billion annually, driven primarily by U.S. demand. According to IDG News Service, India alone racked up $3 billion in outsourcing revenue last year, accounting for 70 percent of the world's offshore outsourcing deals.
    Big Indian consulting firms are increasingly pursuing more strategic relationships with clients — relationships in which they not only maintain applications but also get involved during strategy and development, IDC reports. These firms are growing so large and competitive that they're beginning to "pose a serious threat to the top global players," according to the IDC report, "as they strengthen their onshore presence, develop relationships higher up in the food chain within customer organizations, utilize new technologies, and invest in developing hosting infrastructures."
  • Investments and Pensions Europe: DC to take off in Germany, Watson Wyatt says. Excerpts: Defined contribution pension plans are set to boom in Germany, according to international consultant Watson Wyatt. The firm estimates that three-quarters of companies that currently offer a pension in Germany do so via a defined benefit scheme with the rest DC. In the UK, by contrast, DC now accounts for 62% of coverage, with DB plummeting to 33% from 71% over the last eight years. Marc Oliver Heine, senior consultant at Watson Wyatt’s office in Munich, thinks DC could go the same way in Germany. [...]
    Stiefermann’s point was echoed by Boy-Jürgen Andresen, chief executive of German pensions consultant Heissmann, who said: “In the US, where DC dominates, there have been many cases of employees suing employers when their DC plans have failed to meet their expectations.” “In view of our experience with strict, employee-friendly German labour courts, there is a risk that a situation like that in the US could arise,” Andresen, who is aba’s current chairman, added.
  • In a Yahoo! message board post, "dave49_98" answers the following question: Our company got acquired by IBM. We were acquired for our technology. I am on product development side and based in US. I wanted to gauge what to expect in recent future.
    Full excerpt: When we were outsourced to IBM from AT&T it wound up costing me about $9000 a year for additional healthcare costs and loss of pension. Then, after 3 years they sent our jobs to India.
    Since companies are getting wise to IBM and bringing stuff back in house, like Sprint or JP Morgan or Eckerds, IBM tends to move stuff offshore quicker and fire the locals so it cannot be brought back in house.
    Always remember, if their lips are moving, they are lying. They will tell you about great benefits, without telling you they cost more every year for less coverage. They will tout the new 401K without telling you that if you put in 18% of your salary it would amount to 50% of the defined benefit plan they cancelled. And they will gloss over the fact that while the stock has way down under Sam, he still gets his $10,000a- day pension.
    They will tell you about world class education, yet with AT&T, for 3 years they cancelled all training every January, - costs too much.
    So the bottom line is that when you see a company trying to "buy growth", you know they are in big trouble, and IBM has been buying a lot lately.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Yahoo! message board post by "trvhdi". Full excerpt: That is actually quite typical for a 50+ year old person who can only purchase at individual, rather than group rates in NC. In my case, because I have a minor pre-existing condition, my current rate would come to about $2,400/mo. If I add my wife, it will cost an additional $400/mo.
    Go to the BC (Blue Cross) web site and get a quote. Individual rates for a 50+ year old will likely be about $400/mo. However, when you submit an application, based on your responses, you will be requoted a rate which is anywhere from .85X (for a young, healthy person) to 7X (for someone with a chronic condition such as diabetes). Although insurance is designed to be a "shared risk" program, it only functions that way for those who are part of a LARGE group. Clearly this situation needs to be corrected. As more corporations eliminate retiree health insurance programs, more individuals will be faced with the likelihood that they cannot afford health insurance.
    FYI...One solution being considered by the NC State Legislature is to create a "high risk" pool similar to those currently available in 38 other states. It would limit the cost to 150% of the price charged to other, healthier members. While this doesn't solve the problem, it is a good start. Ultimately we need a system (public or private) that includes everyone in a single risk pool.
  • Yahoo! message board post by "fhawontcutit". Full excerpt: THANK YOU, TRVHDI! You have verified what I have warned against for a long time on this board. Individual policies are HORRIBLY expensive. From my experience, $20,000 per year for employee and spouse is not out of the question if one has a pre-existing condition. (And you'd be surprised what an insurance company will deem a "pre-existing condition".)
    This is what I have tried to tell people for months. It is a huge exposure for retirees and employees who get fired prior to retirement eligibility. The problem is getting coverage under a group plan until age 65,when Medicare kicks in.
    It is unbelievable that people think that after their FHA runs out, that they will just go get a "cheaper" individual policy. They could be in for a very rude awakening. Please read the following article that talks about the insurance exposure that early retirees have: http://www.pensions-r-us.org/Health_Limit_Retirees.htm
    Also look at Jerry Martin who HAD coverage under a group retiree health plan, but the premiums went up to $2,066 A MONTH:
    Jerry Martin, who retired in 2002 after 17 years with TXU, planned to pay the full cost of the company's retiree health benefit for himself and his wife. But he dropped the coverage after TXU's actuaries revised their estimates, and his premium jumped from $1,224 a month last year to $2,066 on Jan. 1, 2004, dwarfing his $1,276 monthly pension and leaving him angry.
    To the people on this board: You have a healthcare problem.
    As more corporations eliminate retiree health insurance programs, more individuals will be faced with the likelihood that they cannot afford health insurance.
    That's exactly why I have maintained that the retiree health plan changes in 1999 are a bigger threat to retirement security and a bigger problem than the pension changes.
    FYI...One solution being considered by the NC State Legislature is to create a "high risk" pool similar to those currently available in 38 other states. It would limit the cost to 150% of the price charged to other, healthier members. While this doesn't solve the problem, it is a good start. Ultimately we need a system (public or private) that includes everyone in a single risk pool.
    I think you are going to find that even a "high risk" pool can be prohibitively expensive. And if people think they will just go the high-deductible route, they need to understand that they have to find an insurance company that will insure them. NET: Retiree healthcare coverage is a problem. Don't pretend that it isn't.
  • Yahoo! message board post by "trvhdi". Full excerpt: Don, I'm afraid you are offering false hope regarding the availability of group coverage. From personal experience I can tell you that it is available only to those who are in very good health. That is unlikely to be the case for those of us in our 50's. Conditions as common as high blood pressure, extra weight, high cholesterol, and lower back pain can impact the cost or availability of coverage. Although the existence of only one of these will usually just increase rates for individual policies, more than one of them...or a more severe condition... will likely result in a waiver that excludes coverage for specific conditions, or will cause an applicant to be denied acceptance in a group plan.
    Concerning your suggestions, the information shown below comes from the AARP and the NC Dept. of Insurance websites.
    From AARP: As of September 2005, the Personal Health Insurance Plan is available in the following states: Alabama, Arkansas, Arizona, Colorado, Connecticut, Florida, Illinois, Maryland, Missouri, Nebraska, Ohio, Oklahoma, Pennsylvania, Texas and Virginia.
    For those of us in the other 35 states, AARP is not an option. However, in the hope that moving to one of these states would enable me to obtain affordable coverage, I researched this option. Unfortunately, I found that a waiver would exclude coverage for my pre-existing condition.
    From the NC Dept of Insurance: What is Association group health insurance coverage? Under an association group arrangement, the master group policy is typically issued to the association and coverage is offered to the association members. Generally each applicant must meet the company's underwriting guidelines. Applicants who fail to qualify can be denied coverage or exclusionary riders may be attached to the policy.
    The fact that so many people are paying high rates for individual policies is evidence that the association plans are not a viable solution for many us who can't find affordable health insurance.
  • Christian Science Monitor: Companies explore overseas healthcare. To cut its insurance costs, a US papermaker plans to let workers seek medical care abroad in 2007. By Patrik Jonsson. Excerpts: Carl Garrett, a paper-mill technician in Leicester, N.C., is scheduled to travel Sept. 2 to New Delhi, where he will undergo two operations. Though American individuals have gone abroad for cheaper operations, Mr. Garrett is a pioneer of sorts. He is a test case for his company, Blue Ridge Paper Products, Inc., in North Carolina, which is set to provide a health benefit plan that allows its employees and their dependents to obtain medical care overseas beginning in 2007. [...]
    With US health insurance costs soaring, cash-squeezed companies such as Blue Ridge and poor states such as West Virginia are considering affordable plans that may require their employees to travel to India, Thailand, or Indonesia. Critics say that limited malpractice laws in foreign countries makes such travel risky as well as the prospect of spending 20 hours on an airplane after invasive surgery. Despite the concerns, "medical tourism" is morphing into "global healthcare." "Global healthcare is coming and American healthcare, which is pricing itself out of reach, needs to know there are alternatives" in order to improve, says Alain Enthoven, senior fellow at the Center for Health Policy in Stanford, Calif.

New on the Alliance@IBM Site:
  • IBM Pension Lawsuit FAQ about Cooper v IBM (Updated 8/8/06)
  • From the Job Cuts Status & Comments page
    • Comment 8/22/06: IBM Tucson is still hashing out who goes and who stays in STG. The 15K employees in STG mentioned include "everyone under Rod Adkins". The business plans are being worked on and lumped as portfolios. Some portfolios are ranked higher than others but there are only three rankings. Highest ranking ones are left untouched. Those in the middle feel cuts (resource actions) and those on the third tier get severe cuts. Originally, under my second line manager, we were to be cut by 60%. That was a month ago but still no word about when the axe falls nor who gets hit by the axe. Morale is in the sewer because of this. We are frustrated and sick of the environment. My resume is polished and I'm looking for jobs outside IBM and in a different line of work. What is the point of fighting a losing battle to keep my job? What victories have we won to keep our jobs? Sign me... -Frustrated in Tucson-
    • Comment 8/22/06: Responding to 8/20/6. I was told 90 days prior it was "skills" of why I was on the redeployment list. 60 days in/30 days left, I was then told it was "performance", which, was 110% wrong, but I was so tired of what IBM has become, I just took the severance and walked, once a great place to work, but last few years, it's just gotten worse by the quarter, and I realized it's going to continue to get worse and will not get better, so I walked. -Anonymous
    • Comment 8/23/06: GFW cuts will hit Rochester and Austin. 35% reduction inclusive of contractors and LTS, the list will be unsealed 31 Aug. IBM India will be the primary focus of all future work. -Anonymous-
    • Comment 8/24/06: If you are a PBC "2+" performer from last year and think you are safe from losing your job for this year? Well, THINK TWICE. IBM has been "managing out" not only PBC "2" performers but also PBC "2+" performers. It is not in the realm of imagination they have even managed out at least one PBC "1" employee if they can afford to replace that employee with cheaper resources. So you think your job is SAFE? Do something about it. Join the Alliance and protect yourself as an IBM employee. Your career in IBM might depend upon it! -Anonymous-
    • Comment 8/25/06: I was told by the managers will be given the plan details on Tues Aug 29. This is in the mid-Hudson valley, NY, STG. -Anonymous-
  • From the General Visitor's Comment page:
    • Comment 8/21/06: Workers are laid off to improve the profitability of the company - in the short term. It is the prediction of future earnings that drives the stock price. Performance and skills are not the primary reason. In fact the spreadsheet governs the reasoning. Don't for a minute think that if you are a superior performer that you will prevail. It is not about building product or providing services it is about showing paper profits to Wall street. We must organize. The machine is larger than you think. -3 - 6 It is the bottom line-
    • Comment 8/24/06: AFTER over 30 years of loyal IBM service I retired 19 years ago. Since then I have received one (1) VERY Small Cost of living increase, while all costs especially medical have gone though the roof. Where is the Watson family when we need them? DO YOU REMEMBER RESPECT FOR THE INDIVIDUAL? WHO thought it would come to this? Thanks Lou (the screw) -Anonymous- Alliance reply: And thank Sam Palmisano for continuing Lou's dirty work.
    • Comment 8/25/06: Can someone please show evidence that long term employees are more expensive? I don't believe this to be a true statement, when you consider high non-salary costs common to all employees, and the fact that the older workers aren't always the highest paid. -Anonymous-
  • Pension Comments page
  • IBM employees on employee raises

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. Some sample posts follow:
  • "Losing the perch" by "wonderaboutibm". Full excerpt: Well ... now HP, until recently something of a basket case, is set to surpass IBM in total revenue. Must be a real burn to the mgmt, since they are obsessed with "top line" growth.
    So obsessed, in fact, that at least some units appear to be trying to will a 10% revenue kick over and above earlier targets. We have all seen, since the deflation of the Y2K business, this tendency to order huge revenue increases from on high, even if no one has the foggiest idea how we will get the numbers, and even scarier, how we would handle the business were we to make the numbers being demanded.
    My guess is that the revenue targets for bonuses have been so inflated even since the beginning of the year that, at least as far as mgmt is concerned, whatever bonus outflows required will be that much lower. A silver lining for finance, I suppose.
    But getting back to HP, hell ... we are starting to lose the prestige wars now, and we are well on the way to losing the operational wars. Unless the 3Q numbers are blockbusters (not very likely) there will be much more angst in the near future.
  • "Sad for the good & dedicated IBM'ers" by "civilliberty". Full excerpt: But not surprising. The CEO of HP does seem to have real ability and entrepreneurial (I'm sure I spelled that incorrectly) flair, unlike IBM which thinks it's reputation alone will carry it to places within the market. IBM's decline in recent years reminds me of the arrogance it had years ago when it thought it could shape market direction by creating 'MicroChannel' hardware architecture for PC's - little realizing it was losing it's influence in the market. The same thing is happening the service business.
  • "co-workers defected to client" by "pitythefool". Full excerpt: Is there a period of time that IBMers are meant to wait before they can? I can recall something about a 6 months before one can work for a client or IBM will supposedly sue your a**. But in all the projects I've worked on, there have been heap of people who've gone from being IBMers one day, then client in-house staff the next day without much effort by upper management to retain them.
    My co-workers left IBM to work for the client, understandably because of the bigger salary package, much much better work-life balance, less backstabb-y work environment and politics, and more appreciation for their work in general. Has IBM just given up because they've got too many other cases in court? Or do they just not really care about retaining experienced and valuable employees?
  • "No Problem" by "Dose of reality". Full excerpt: Yours and the clients' non-compete agreements are just great big "beware of dog" signs. They are meant to discourage, not prevent defections. In most cases, we will not pursue any legal remedy if you jump ship, since in most cases we are still doing business with the client, and a lawsuit doesn't make for good client relations.
    Also, in the case of our recourse against you, when it comes down to a choice between "right to work", and a flimsily written non-compete agreement/policy, the courts will universally come down on the side of the employee, and the stakes aren't high enough for IBM to pursue it. Only in an extreme case, with mass defections to a client that had iced its relationship with IBM, would there ever be a chance that you would be threatened and perhaps litigated, but I really wouldn't worry about it. Go forth and restart your career!

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