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Highlights—January 12, 2008

  • Wall Street Journal: Simple Math to See if You Have An Age-Appropriate Nest Egg. By Jonathan Clements. Excerpt: It's halftime. What's the score? Today, I turn 45. (Don't feel bad; only my mother ever remembers.) By my reckoning, that puts me halfway through my working career and hence halfway to retirement.

    How big a nest egg should a 45-year-old have? Here's a look at who faces a midlife financial crisis -- and who might be able to retire early.

  • The Journal News (Westchester, Rockland and Putnam counties in New York): IBM pension freeze has ripple effects in retirement system. By Julie Moran Alterio. Excerpts: This month might just mark the moment when workers in America finally accept the idea that pensions are on their way out. IBM Corp., a large and profitable American company whose reputation for providing blue chip benefits was once legend, has frozen all of its pension plans as of Jan. 1.

    Benefits accrued as of Dec. 31 won't be touched, but the 107,000 U.S. workers enrolled in one of IBM's pensions plans won't garner any more years of service toward their final benefit even if they spend another 20 years inventing microchips or writing software or selling services. ...

    While retirement experts are calling the terms [of IBM's enhanced 401(k) plan] among the most generous in corporate America, they also caution that middle-aged workers are unlikely to save enough in their 401(k) plans to close the gap between their new benefits and the pension they would have enjoyed under IBM's old plan.

    What makes Big Blue's freeze particularly notable is that it wasn't undertaken because the company is in financial trouble or because its pension plan is underfunded. IBM's pension fund, with assets of $52.9 billion, had a surplus of $6.4 billion at the end of 2006.

    When IBM announced the pension freeze for all U.S. workers in early January 2006, touting the $3 billion the change would save the company by 2010, it was just days away from reporting net income of $7.9 billion for 2005. ...

    "These companies that traditionally did right by workers have given a green light to other companies. This opened the floodgates. It became permissible," said Karen Friedman, a policy director at the Pension Rights Center, which has compiled a list of more than 75 companies freezing pensions in the wake of the IBM and Verizon moves. "Companies are getting out of the pension business. They are backing out of promises to workers," she added. ...

    Pensions for CEOs. Some experts believe executives at U.S. companies are willing to cut their pension plans because fewer of them are relying on them for their own retirement. The law says that pension benefits cannot be more than four times the wage of an average worker. Meanwhile, compensation for chief executive officers has risen from 40 times an average worker's pay in the 1970s to 367 times average in the years between 2000 and 2004.

    Companies started setting up what are known as supplemental executive retirement plans. While traditional pension plans are "qualified" by the IRS as tax deductible, enhanced executive plans are not.

    Like those of other IBM employees, the company's chairman and chief executive officer, Samuel Palmisano, had his pension frozen on Jan. 1, but he is unlikely to notice any gap in his benefits. As of Dec. 31, 2006, Palmisano had earned an annual pension of $87,702 a year through the qualified pension plan.

    In IBM's supplemental executive retirement plan (SERP), he has earned an annual pension of $2.86 million. The total yearly benefit he stands to gain is more than $2.9 million, which works out to $8,075 a day.

    Based on 33 years of service, the total value of Palmisano's pension benefits are $559,722 for the share in the qualified pension plan and another $18.3 million in the executive plan for a total benefit of $18.8 million.

    "The enormous divergence in pay and the emergence of non-qualified plans as the main form of pensions for upper management have reduced the firm's interest in the pension plan that benefits the rank and file," the authors of the Boston College study wrote.

  • PlanSponsor: Firms Stand By Non-qualified (SERP) Plans. Excerpts: A majority of employers have no intention of terminating their non-qualified executive retirement plans due to final Internal Revenue Code rules governing these arrangements, according to a survey released by Buck Consultants.

    The survey found 95% of respondents will retain their executive defined contribution plans and 89% will continue their executive defined benefit plans, according to a press release. However, in response to grandfathering provisions of Section 409A regulations, approximately 30% of these non-qualified plans have been split into two parts.

  • The Journal News: Debate continues over whether 401(k) can match IBM pensions. By Julie Moran Alterio. Excerpts: When Shirley Hsieh joined IBM in 2004 right after earning a master's degree in public policy, retirement benefits weren't on her mind. She was more interested in the details of her new job consulting clients in the federal government and defense industry in Washington, D.C. "It was a good company. I liked the job they were offering me. It wasn't until the first week of orientation when they were explaining the benefits to me that I thought, 'Oh, this is pretty good,'" she said.

    Hsieh, who is 28, got in just under the wire before IBM stopped offering pensions to new hires in 2005. But her benefits stopped accruing Jan. 1, like those of the rest of the 107,000 U.S. employees with pensions.

    She is now enrolled in IBM's beefier 401(k) and will receive 2 percent of her salary as an automatic contribution. She also will receive a dollar-for-dollar match on the first 6 percent she contributes for a total of 8 percent of her salary from IBM. ...

    Younger workers such as Hsieh are the most likely to benefit from the trend away from traditional pension plans in corporate America. ...

    A study by the Center for Retirement Research at Boston College examined a hypothetical scenario involving a 35-year-old worker who joins a new firm and enrolls in its traditional pension plan. If he retired at age 62, he could expect his pension to replace 43 percent of wages.

    But if his pension is frozen at age 50 after 15 years of service and he is moved into a typical 401(k) plan, he would receive just 28 percent of wages at retirement - 13 percent from the pension and 15 percent from the 401(k). ...

    Steven C. LeClair, a 62-year-old Garrison resident who worked at IBM's Fishkill plant for most of his career before retiring in 1996, said that when he was hired in 1965, the pension program was a big inducement.

    "Would I have preferred a generous 401(k) plan over the old pension plan? In a word, no," he said. "The pension plan in effect at the time I interviewed and joined IBM in 1965 was non-contributory, and was part of the inducements offered by IBM to secure the level of talent they needed. We were told that as long as we did our job and kept our noses clean, we were guaranteed a job until we retired, with the full benefits package for life."

  • Yahoo! IBM Pension and Retirement Issues message board: "Comments from IBMers Moving to AT&T" by "ibmaccountant". Full excerpt: Folks, A couple of friends of mine in IGS sales and delivery who have been designated to move to AT&T as part of the latest outsourcing have advised me that after looking at the AT&T benefits (after deciding to go) they find the cost of the benefits for employees at AT&T seems to be 15-20% less than IBM. The medical, dental etc. are all there and cheaper. They've also commented that for the sales folks, the pay is much better and there are merit increases.

    So much for IBM's pay and benefits competitiveness. Cringley is right again. BTW, the worldwide estimate of the folks being moved to AT&T is 5000. We're slowly getting to your estimate of IBM population numbers, Bob Cringely.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Comments from IBMers Moving to AT&T" by "sby_willie". Full excerpt: AT&T does have a union. IBM in the USA has a non-bargaining union at this point in the Alliance@IBM (CWA Local 1701) but IBMers, unfortunately, still largely don't want to grasp what collective bargaining and negotiating for improved benefits in a union can do for them. The reason is not at all clear. If IBMers would embrace a collective bargaining union, I bet IBM would have very comparable and possibly better benefits than AT&T now has and offers.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Retire from IBM" by "madinpok". Full excerpt: If your job is going away, you should allow IBM to lay you off and pay you severance pay, rather than retiring voluntarily in which case you won't be able to collect severance pay. This will not affect your pension in any way - as far as your pension goes, being laid off is still "retirement." But being able to collect up to 26 weeks of severance pay is significant!

    I highly recommend that you NOT tell your manager that you plan to retire. You want them to know that they will have to lay you off in order to get you to leave. You don't want there to be any confusion over the reason you are leaving. Make it clear that it is not voluntary on your part. You don't want to give them a way to weasel out of that severance pay!

    You should run a pension estimate yourself on the pension estimator web site. But also call the Employee Services Center and request an official estimate. In theory, the two should match, but calling the ESC is the way you kick off the retirement process.

    When you call the ESC, request that you be assigned to a Retirement Benefit Coordinator. This is one person who you can answer your questions and deal with on an ongoing basis during the retirement process, rather than getting passed back and forth between many different people.

    Once you get your estimate in the mail, it is valid for 180 days and during that time you can take the next step and request your official retirement paperwork. If you don't do this, it is not a problem, you will just have to start the process over with a new estimate and that may delay the start date for your first pension payment. Since you are more than 180 days away from your termination date, you may want to wait a couple of months before you do this.

    You will have a number of options on your pension payout, such as taking a lump sum or not and whether you want Joint and Survivor benefits for your spouse.

    One very important thing: If you do not select your pension options within 45 days of your separation from IBM, you will lose the ability to select certain options, including when your pension payments can start.

    Since you are close to age 65, you will not be getting much of an early retirement subsidy in your pension, so taking the lump sum option should give you an amount that is a pretty fair value in terms of what that portion of your pension is actually worth. I highly recommend talking to a fee-for-service financial planner about your options and what makes the most sense for you.

    For medical benefits, it sounds like you are probably in the subsidized retiree medical plan, where IBM contributes up to $7000 to your medical insurance costs (dropping to $3000 once you are on medicare).

    If you are laid off from IBM, you will be eligible for transitional medical benefits for up to 18 months. For the first 6 months, IBM will probably pay 100% of the cost. You will almost definitely want to stick with this coverage as long as IBM is paying for it.

    After that, you can be covered by COBRA medical insurance for the remainder of the 18 months, or you can drop that in favor of the retiree medical coverage. COBRA coverage will cost you around $6000 per year for yourself, and $12,000 for yourself and your spouse. The retiree coverage probably will be less expensive (but some of the co-pays and deductibles tend to be higher).

    When you leave IBM, you will have 30 days to select your medical plan, retroactive to your last day of work. It is very important that you make your selection during this time and not create a gap in your medical coverage!

    If you log on to the Fidelity NetBenefits web site, you should be able to see what the retiree medical plans would cost you if you retiree this year.

    In terms of personal holidays and vacation, use your personal holidays first, since IBM will not pay you for any unused holidays. Then use your vacation time. If you have any vacation days left on your last day, IBM will hand you a check for the unused vacation. You may want to document what days you are taking off as personal holidays and what days are vacation days by sending e-mails to your manager stating which days are which so there is no confusion at the end.

    If you are contributing to the 401k plan, you way want to boost your contributions so that you can reach the maximum contribution limit by your last day of work.

    If you set aside any money in the health care reimbursement account, you must use it for expenses that occurred before your last day, so plan to make any doctor appointments or purchase new eye glasses before you retire. Also, you can spend your full year's contribution, even though you won't work the full year. For example, if you were contributing $100 per month, you can spend $1200 from your account, even though by August you will have contributed only $800. This is free money from IBM, so take advantage of it!

    I'm sure you have many other questions. Feel free to ask and we'll try and help.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Retire from IBM" by "ol_pops". Full excerpt: I got RA'd in 2007 with 33 years too. Here's my advice for the sequence that I encountered. Note: This is after your mgr has informed you that you will get a package. They want you to sign the "Agreement not to sue" and the separation money is the carrot. If you do not get any money, then DO NOT SIGN IT !
    1. Call the Employees Service Center (ESC) asap. They will assign you a benefits coordinator. That's the person you work with for your pension and medical choices. This can take a while to make contact so you need to get this started as soon as you can.
    2. The estimator tool is very close but not precise. The ESC needs to schedule an official calculation of retirement benefits. (My official one was $1 more than the estimator.)
    3. They send you a package with your pension choice (you told the coordinator). Sign and return asap too.
    4. It can take a month or more to get your pension started so make sure you have cash in the meantime. It is retroactive to your effective date though.
    5. Be aware. Retirement is effective at the end of the month BUT you will get the first paycheck of that month and your manager has your last paycheck (maybe separation check too) in their desk. You are off the payroll system after that first check. Make your 401K deduction choice far enough ahead to be in that last check.
    6. Make every Dr. appointment before you are off the system. Order all Rx drugs too. See that dermatologist you always wanted. Do it while you are still on the active list.
    7. Medical: a) I chose TMP/COBRA. This continues my current plan choices. Otherwise, I would have had to sign up for all new plans under the retiree choices. See netbenefits to see the retiree choices. b) Dental and vision are automatically switched to the retiree plan. TMP/COBRA is available for medical only. d) They bill me for it until the pension starts where they would take it out automatically. d) Current bill (May + June) = $508 (PPO+, Self +1)
    8. Get organized: a) keep notes on all conversations with the ESC: dates, times, who you talked to, what was said... b) get a file for home to keep all the stuff in - you will get a lot c) The web site has a checklist for separation/retirement. Print it - follow it d) print any other docs you can find
    9. GUL - Maybe you signed up for a lot of extra insurance so your family would have money if you died and didn't get a pension. Now is the time to reduce that - you got the pension.
    10. I recommend the 100% spouse replacement option for your pension. Discuss it with your spouse.
    11. Discuss it all with your spouse. This is a big deal and they need to be involved.
    12. I called Vanguard to set up a rollover IRA of my 401K. I got the accounts,etc ready to accept the money. a) As long as you are 59 1/2 (or better), you can transfer into an IRA anytime b) Do you like Financial Engines (off the 401K website)? Don't transfer all the money at once. You lose the link. c) In fact, you can do it in stages. The plan limits you to 4 withdraws a year. d) I used Vanguard and got Financial Engines through them instead of IBM.
    13. I transferred my 401K to a Vanguard IRA. Go on the 401K website and follow the prompts to do a rollover. Make sure it's a ROLLOVER! As you fill out the steps in the request, you will get to a point where they say "The check will be sent to your address on record". Important !!! -> there is a link to fill in the address of a financial institution. Do that! You should have already spoken with the company. Then you see how the check is to be written. ==> The Vanguard Group, F/B/O "your name". (F/B/O = For Benefit Of) You do NOT want the check to be made out to you directly !!! This is so very important !!! They sent the check by ordinary mail. All I did was send it on to Vanguard. This whole process can take a week or more.
    14. Medical, dental,etc is not automatically taken from your retirement check. You need to fill in the forms to make that happen. More time passes...you will get a bill in the mail for those things until the auto-deduction kicks in.
    15. FYI - hopefully not soon a) your pension and your wife's part of it come from different accounts. If you die, your wife needs to contact the ESC asap so her part can start. Meanwhile, a check or 2 of yours has come but you are not around anymore. That money has to be returned to IBM. (Only an accountant could love this system...)
    16. Got any old stock options? They time out soon after you leave (90 days). Check the web site.
    17. Getting a retirement gift? Went online and didn't see anything you liked or the one you liked was discontinued? You have a year to claim it. Check every couple of weeks. The selection changes.

    Once you get your first pension check: Call 1-866-716-4098 Cooper Settlement ... you may now be able to receive additional money now that you are retiring due to a settlement .... here's the website info: www.coopersettlement.com/subclass1and2 Make sure you are on their list. You should get a package from them 90 days after your first retirement check. Look for it and call if you don't get it. It's not much but it could buy some extra beer...

  • Wall Street Journal: Automatic 401(k) Plans Might Not Save Enough. By Eleanor Laise. Excerpts: Automatic 401(k) plan enrollment, advocated by lawmakers, regulators and financial-services firms, isn't helping many workers save adequately for retirement, according to recent research.

    While automatic enrollment helps many people start saving, it often excludes a large segment of workers and steers participants to a contribution rate that is in many cases below the rate these employees would have chosen on their own, the research shows. Nearly two-thirds of employers who use automatic enrollment apply it only to new hires, according to a survey of 5,490 plans by Plansponsor, a retirement-research firm in Stamford, Conn. And the median participant-contribution rate decreases under automatic enrollment, according to a study of about 50 plans by mutual fund firm and 401(k) provider Vanguard Group Inc.

  • Forbes: UAL's Internal Discord. By Melanie Lindner. Excerpts: United Airlines, a subsidiary of UAL, is losing money as result of a dispute between the company's management and pilots. Analyst James Higgins of Soleil Securities lowered his rating on UAL Monday morning to "hold" from "buy," saying the company's internal disputes have weighed on its bottom line. One example: United pilots are still miffed by management's early December approval of a $250.0 million special cash dividend to shareholders. As a result, the pilots refuse to fly more hours than specified in their contracts, which may lead the Chicago-based airline carrier to cut back its flights. ...

    Chairman Glenn Tilton noted when the dividend was announced the $250 million includes $20 million to employee shareholders. Many long-time employees suffered significant pay cuts when the company filed for Chapter 11 bankruptcy protection in 2002. Since exiting bankruptcy, UAL has reduced its debt by $2.7 billion, but still owes $8.5 billion in long-term obligations.

    United's unions don't think the $20 million comes close to compensating for their losses, especially considering executive pay. Tilton, for instance, earned $23.8 million in salary and long-term compensation in 2006 while Chief Financial Officer Frederic Brace earned $13.2 million. Some employees, including Greg Davidowitch, president of the Association of Flight Attendants at United, were quick to condemn the distribution, calling managements' actions "shameless," "reckless" and "irresponsible." "The best shareholder initiative would be one that invests in the employees for the long-term success of the airline," said Davidowitch.

  • The Telegraph: Standard of living in UK better than in USA. By Lucy Cockcroft. Excerpts: For the first time in more than a century the standard of living in Britain is higher than in America, according to a new report. Analysts at the respected Oxford Economics consultancy say that increasing incomes, free healthcare and longer holidays make the average Briton better-off than his or her US counterpart.

    They predict that gross domestic product (GDP) per head in the UK, an indicator of average incomes, will be £23,500 in 2008, compared with £23,250 in America, reflecting the strength of the pound against the dollar and the steady growth of the British economy.

  • Los Angeles Times: Chamber of Commerce vows to punish anti-business candidates. “We plan to build a grass-roots business organization so strong that when it bites you in the butt, you bleed,” chamber President Tom Donohue said. The group indicates it will spend in excess of the approximately $60 million it put out in the last presidential cycle. By Tom Hamburger. Excerpts: Alarmed at the increasingly populist tone of the 2008 political campaign, the president of the U.S. Chamber of Commerce is set to issue a fiery promise to spend millions of dollars to defeat candidates deemed to be anti-business. "We plan to build a grass-roots business organization so strong that when it bites you in the butt, you bleed," chamber President Tom Donohue said. ...

    Presidential candidates in particular have responded to the public concern. Former Sen. John Edwards of North Carolina has been the bluntest populist voice, but other front-running Democrats, including Sen. Hillary Rodham Clinton of New York and Sen. Barack Obama of Illinois, have also called for change on behalf of middle-class voters. ...

    Since he took over the chamber, contributions by businesses have soared, often to pay for political advertising known as "issue ads," which are exempt from many of the Federal Election Commission limits. Under a system Donohue pioneered, corporations contribute money to the chamber, which then finances attack ads targeting individual candidates without revealing the name of the businesses involved in the ads.

    In 2000, drug companies paid the chamber to run advertisements in Michigan to help elect then-Republican Sen. Spencer Abraham. Pharmaceutical companies that year gave the chamber additional millions to run issue ads attacking mostly Democratic House candidates. And large corporations paid $1 million or more to support advertising campaigns against judges deemed too friendly to plaintiffs. ...

    In the interview Monday, Donohue said he was unhappy with anti-corporate rhetoric coming from candidates in both parties and he wanted candidates to know about the chamber's ambitious plans. Donohue is not likely to name names at his news conference, but there is no doubt he is unhappy about Huckabee. The concerns Donohue expresses reveal apprehension that Republican pro-business candidates may lose favor with voters and that the GOP's important but fragile alliance between economic and social conservatives is showing signs of strain. ...

    Even more than Republicans, Democratic candidates have boosted the volume of populist messages as the economy softens. Edwards, whose trial lawyer past has been openly criticized by Donohue for years, launched new advertisements that warn against the danger of replacing "corporate Republicans with corporate Democrats." The middle class, Edwards says in the new ad, is "losing ground while CEOs pocket million-dollar bonuses and corporate lobbyists get their way in Washington."

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Reuters: France best, U.S. worst in preventable death ranking. By Will Dunham. Excerpts: France, Japan and Australia rated best and the United States worst in new rankings focusing on preventable deaths due to treatable conditions in 19 leading industrialized nations, researchers said on Tuesday. If the U.S. health care system performed as well as those of those top three countries, there would be 101,000 fewer deaths in the United States per year, according to researchers writing in the journal Health Affairs. ...

    They called such deaths an important way to gauge the performance of a country's health care system.

  • The Century Foundation: The Newest Last-Place Finish for U.S. Health Care. By Niko Karvounis. Excerpts: Many people like to say that the U.S. has the best health care system in the world. But recent numbers from the Commonwealth Fund should put a stop to this cycle: the U.S. health care system places last in the world when it comes to stopping preventable deaths. In other words, we spend more but accomplish less—does that sound like success to you?

    The new study, funded by Commonwealth and appearing in the Jan/Feb ’08 issue of Health Affairs, looks at “deaths from certain causes before age 75 that are potentially preventable with timely and effective health care.” Relevant causes of death include diabetes mellitus, intestinal infectious diseases, whooping cough, childhood respiratory diseases, leukemia and others.

    The authors, both from the London School of Hygiene and Tropical Medicine, found that America’s success in staving off these health problems has decreased over time. Between 1997/1998 and 2002/2003, preventable deaths fell by an average of 16 percent in all 19 industrialized countries considered; but the decline in the U.S. was only 4 percent. In 97/98, “the U.S. ranked 15th out of the 19 countries on this measure—ahead of only Finland, Portugal, the United Kingdom, and Ireland—with a rate of 114.7 deaths per 100,000 people.

  • The Kaiser Family Foundation: AARP Seeks U.S. Supreme Court Ruling That EEOC Lacks Authority To Allow Employers To Reduce Health Care Benefits for Medicare-Eligible Retirees. Excerpts: AARP has petitioned the U.S. Supreme Court to review whether the Equal Employment Opportunity Commission had the authority to issue a Dec. 26, 2007, regulation that allows employers to legally eliminate or reduce health benefits for retirees when they reach age 65 and become eligible for Medicare while retaining benefits for retirees under age 65, CQ HealthBeat reports (Reichard, CQ HealthBeat, 1/3).

    The ruling allows employers to create two classes of retirees -- those younger than age 65 and those older than 65 -- and offer different benefits to each group. In addition, the ruling allows employers to eliminate or reduce benefits provided to spouses or dependents of retirees older than 65. EEOC proposed the rule in response to a 2000 U.S. Court of Appeals decision that required benefits to be offered at the same level for Medicare-eligible retirees and those younger than 65 (Kaiser Daily Health Policy Report, 1/2). A June 2007 decision by the Third Circuit Court of Appeals found that EEOC has the authority to create the exemption under the Age Discrimination in Employment Act.

  • Los Angeles Times: Denying care or denying payment? Take a deep breath, and read. By Steve Lopez. Excerpts: Preston doesn’t have cancer, but he was born with cystic fibrosis. And the cost of the medicine that keeps him breathing just shot up like a rocket, thanks to an insurance company decision I’m still trying to decipher. … the cost of Pulmozyme… had been running them $30 a month. Suddenly it was $784. ...

    Hoping for an explanation, and reconsideration, Preston’s parents filed a grievance. Blue Cross quickly rejected it. “Pulmozyme is no longer a Formulary medication,” said the virtually incomprehensible letter, which gallingly suggested the increase was part of Blue Cross’ commitment to providing its customers “the best possible care and access to medications.” ...

    Here in California, Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nuñez would have you believe they stepped into the leadership void with last month's health insurance-for-all proposal.

    But all they've done is come up with a shaky idea to require nearly everyone to buy medical insurance from the same companies we've all become so fed up with. Employers and hospitals would have to pick up part of the tab, and there might be a new tax on cigarettes to provide some support. But even if the vague and dubious funding proposals come to pass, there would be little or nothing in the way of additional controls on insurance companies in terms of what they cover or what they charge. ...

    I began telling Kuehl about Preston and his family's issues with their insurer, but halfway through I stopped myself, figuring she's heard hundreds of similar stories. "No," she said. "It's in the thousands."

  • Los Angeles Times: Moves from the Cigna playbook. By Giuseppe Del Priore. Excerpts: Cigna HealthCare's refusal to cover leukemia patient Nataline Sarkisyan's liver transplant until it was too late is out of the insurance playbook. My patients suffer similar fates every day.

    Insurers always qualify their denial letters with a sentence to the effect that the doctors must provide whatever care is necessary and that the payment is a separate issue. Insurers never deny care — only the authorization for payment. To stall the actual delivery of care, insurers hold out an insincere promise to authorize payment if the doctor provides more information. This leads the doctor on indefinitely, while insurers never say absolutely "no" until the patient gives up or dies. I agonize over having to choose whether to wait one more day for approval or to go ahead with the surgery and potentially damn the patient, his family, and the institution, to assuming the financial consequences. If I do go ahead without approval, no one comes to my defense when administrators ask me why so many of my patients' insurers are not paying. No one rescues the bankrupted families. ...

    The third predictable insurance industry stall is the "expert" review. I would define an expert as a doctor who did a transplant or took care of a transplant patient this week. Insurers that review my denials define any has-been, retired, unemployed failure with a medical license an expert, paid to deny care. This is practicing medicine without examining the patient or seeing all the data. In effect, the licensed nurse or doctor working for an insurer is practicing medicine unprofessionally and criminally.

New on the Alliance@IBM Site:
  • From the Job Cuts Status & Comments page
    • Comment 1/7/08: Ran into a trusted manager last week. He advised that in conversations with some of his executives, IBM will continue quarterly lay-offs until only Sales and Executives remain in the U.S. She told me she's just waiting her turn. If rank-and-file IBMers do not organize, then they deserve what's coming. Join the Alliance while you have a shot, else wait your turn as well.. -Anon in RTP-
    • Comment 1/7/08: Network services delivery AND sales functions sent to AT&T. Up to 5000 worldwide to go. Now comes the server side for SO and GTS. Serving more tired and used up human resources for Wipro! -Outsource Grim Reaper-
    • Comment 1/8/08: I took a new job in 6/07 and was called in on 11/13 by my mgr. and told she didn't think I was a fit for the job and I needed to find a new job by year end or I would get a 3 on PBC. She then said if I didn't find a job I would be offered a sev. pkg. I read the PBC page and it states you have to have consecutive 3 ratings to get let go by the company. I had a 2 last year. When I questioned the mgr. she said she could let me go due to performance. Does anyone know of any different rules. I can't find anything on the HR web page. -Anon-
    • Comment 1/8/08: Ref: "she said she could let me go due to performance. Does anyone know of any different rules?" Yes, they can. It happened to me last year. -Anonymous-
    • Comment 1/8/08: RE: Anon needing to find a new j-o-b **** Forget about looking up different rules. You are an "at will" employee, so you can be let go for no reason. I would make the manager document how you are not meeting requirements, if you have not been put on an improvement plan. Stop working and start looking for a new job - outside of IBM. You are on the disposal list and that marks your end with IBM. Keep collecting IBM paychecks as long as you can, doing nothing but looking for that new job; save every penny you can, as you will need it. When they come at you with the Severance package, smile and take it. Then start the new job you should have found by then. Mo-money and Mo-Happiness. -no-ky-

      Alliance Reply: You are exactly correct. Without a union contract; IBM employees are 'at will' employees and at IBM's mercy. IBM makes their own rules and breaks their own rules whenever they please and whenever it suits THEM. Regardless of whether you deserved a poor performance rating or not; you'll never know for sure because IBM holds all the cards. Organize! It is the best advice and the only real alternative.

    • Comment 1/8/08: The hard reality is that IBM can layoff whoever and whenever they please. Doesn't matter if you are rated a 1 or a 3. I think you are confusing being RA'd with being terminated. Don't make anymore waves so as to not jeopardize a possible severance package. Try to find a another position if that's what you want in IBM. Although why try to stay at a company who clearly wants most of their US workforce gone? IBM management and execs are scum. BUT don't worry, the managers will get theirs too. At least when all that's left are the execs, they can shred each other to pieces while the company goes down the drain. -ANONTOO-
    • Comment 1/8/08: A number of first line managers in Canada are out of a job after the STG reorg on Jan 03, 08. Maybe it's time they feel how tuff it is to find another job in 60 days or be on the chopping block. -sick&tired-
    • Comment 1/8/08: What about Watson Research in Yorktown?I can't see them outsourcing the only group that actually keeps IBM afloat. IBM would be long gone if it weren't for the researchers/scientists working at Watson coming up with all the inventions. -Anon-
    • Comment 1/8/08: You guys just don't get it. In a Globally Integrated Enterprise, no country is the flagship or lead country. Everything is up for grabs. In 2003, I personally saw the plans to move Research leadership overseas as the sales volume moved overseas. Zurich, Japan and Haifa were looked at as leadership sites. The glory days of Yorktown are over. The staff research member"perform" functions are already done overseas and the "leadership" is only in the US. Pretty soon you'll see that move to the top geography for sales. There is already pressure to move Research Division headquarters to either India or China. In GIE, nothing is safe unless it's protected with a union contract. -Globally Integrated Enterprise Slasher-
    • Comment 1/8/08: If the IBM executives could sell Watson to benefit their own gluttonish and greedy objectives believe me they will. IBM will buy and acquire companies that have the innovations and inventions or niche software, solutions, and hardware that they want to get their hand on rather than relying on Watson Research. They have been doing it for awhile now. ANYTHING to drive up the stock price and their own options. Without a union NO ONE is safe. -Anon-
    • Comment 1/8/08: "What about Watson Research in Yorktown? I can't see them outsourcing the only group that actually keeps IBM afloat." Hate to burst your bubble Anon, but most IBM Research work is done at these other locations: Almaden Research Center, Austin Research Lab, China Research Lab, Haifa Research Lab, India Research Lab, Tokyo Research Lab, Zurich Research Lab -Anny_Mouse-
    • Comment 1/8/08: Makes no difference what your PCB rating ever was. That stuff is pure BS. I never got anything but a 2 in almost 10 years and when they needed to cut heads I was gone. It is purely the managers choice on who stays and who goes. I didn't suck up like some others and by the manager coffee every morning so I wasn't on the favorites list. Don't kid yourself, anybody can be a target. Unless there is a Union, they can do whatever they want, whenever they want. -2PerformerLongGone-
    • Comment 1/8/08: I was RA'd after one 3. IBM can select you for the package no matter what your PBC. In the current environment, getting a 3 means you will be RA'd at the earliest opportunity. The two 3 rule is effectively obsolete now that all of the 3's from last year should be gone. But it is still in the personnel policies. If IBM wasn't trying to purge the workforce, you might have a fighting chance without a union contract. Now you need one to survive. -RA'd bear-
    • Comment 1/8/08: I know someone that exactly that is being done to. Was getting PBC 2s, never had bad reviews, now is being told he "lacks passion" for the business which is causing his performance to suffer, in ways that the manager refuses to actually document. It's bull. They have a reduction target they need to make, they round up candidates for termination, and do what they can to lawsuit-proof themselves. I'd have a shred of respect for them if they'd be honest and say, "Sorry, Bob, but you're part of the x% we need to cut this quarter to stay on track with getting rid of all engineering in North America within N years." Rather than this lying crap they make up because they don't have enough genuinely poor performers. But, that would spook the herd, and they need to keep grinding hamburger out of the cash cows as long as possible. -irRational-
    • Comment 1/10/08: It's the same tactic used globally in the so called higher cost centers. The most technically competent professionals in Higher Bands were forced to leave without a package after several years of service .Some chose to resign rather than be subject to the deliberate PBC 3 ratings . Staff over 40s (especially women who were easy targets) and higher bands of technical staff were targeted by Managers who were on Band 7, as a deliberate exercise to lower salaries. The young Managers (thugs hired for the job) who have no education or IT experience got promoted to second-level management for having accomplished the company goals. Mafia organisations will not survive in the IT industry! -Dr. Watson-
    • Comment 1/10/08: Aping the smaller competitors in the market is the strategy IBM is trying to adopt. To sell vapourware, keep the smooth talking, highly-paid Sales and Marketing, and contract slaves to deliver! They can then play the blame-palming game. The " Values" talks were to cover these dirty games. -Annie-get-your-Gun!-
  • General Visitor's Comment page:
    • Comment 1/5/08: As I read the general comment section I wonder to myself what went wrong with the IBM leadership team. Sam Palmisano and he band of executive crooks continue to plunder millions and millions from the company for themselves as they move the company to India for cheap labor and lay off American workers. It doesn't take a genius to see what is wrong with this picture. The issue I have at the moment is why the IBM employees don't see it and support the Alliance so that we can do something about it. Rally support from your coworkers and support the Alliance. You can make a difference in 2008.. -Anonymous-
    • Comment 1/6/08: Well, Iowa results were promising! Not going to say who I had supported, but the idea that in a white state a black man won the caucus was a signal that in the U.S., ALL of us want change. And we will get it. There is no way in a democracy that people will tolerate thieves who steal from employees to make their millions and I think we have just seen that! I personally like Edwards, but I believe that even Obama, if elected, will change the course of things to come.... Au Revoir to the multi-millionaire execs--and their families, who have been robbing us for the last decade. Hey, Sam--hope to see one of your four kids on the cover of Star Magazine soon! You not only ruined your reputation, but that of everyone in your family with your 'policy 'changes. They are probably so ashamed--well, keep going to church, like Lou Gerstner did... It might not help but it won't hurt. You are a disgrace to all Italians in the U.S. Go back to Italy--actually, we don't want you (or your family) there either. So just go--and enjoy the millions you stole. Only you won't when you're on your deathbed, I'm sure. HOORAY OBAMA!!!!!!. -Anon-
    • Comment 1/6/08: IBM refuses to give employees the details of the sev package until they decline the AT&T offer. Nor will they tell you detailed benefit options if you take the AT&T job (like with HMO in your area) again, until you accept the AT&T offer. How can an employee make an informed decision when IBM wont give you all the options up front. All HR partner says it will be similar to other packages. This guy sucks!. -NSDSucks-
    • Comment 1/7/08: To NSDSucks: AT&T benefits are better...trust me...I was just outsourced back to IBM from AT&T. Paying $4-5K more a year for benefits(wife and 3 dependants), $1k more for lost phone concession (free phone, long distance, internet) and no longer have a retirement plan. Probably never see 12-13% yearly bonus again either like I received the last 4 years at AT&T. In my opinion, IBMSUCKS compared to AT&T. -IBMer again-
    • Comment 1/9/08: How much damage does it take to keep Palmisano and his merry band of executive crooks in power? Sam is an arrogant selfish idiot out for himself. He keeps a close network of executive crooks around him as his "yes" men and makes sure they all have millions so that they keep their mouths shut. I can't stand how Sam has ruined this company. Please, support the Alliance and help turn IBM around. Together we can make IBM the great company it once was. -Anonymous-
    • Comment 1/9/08: I had a discussion with my manager today, and we started talking about job classifications. Specifically, the I/T Specialist classification. for server admins He stated that he needs to move me to a new classification, but that everything is frozen right now because they are figuring out some re-classifications of all of the server administrators. He then strongly hinted that it was related to the overtime class action lawsuit. He gave me a very distinct impression that we may see something similar to what happened to deskside support a few years ago, where everyone was re-banded to a band 4 (if I remember correctly) and not allowed to work any overtime.Has anyone else heard anything like this? My manager thought that there would be some type of announcement in a few weeks. I'm really hoping that I misread his hints. -Lowly SA-
    • Comment 1/11/08: I'm one of the SSR's outsourced to Qualxserv almost two years ago.(Strangely enough almost all of us were 45+, what a coincidence.) Nowadays I deal with Dell, Apple, Sony and others as well as IBM/Lenovo. I have seen a definite decline in quality in product and support with Lenovo. At first they just produced IBM designs, now their engineering is coming into play. The boxes look the same but internally they're J U N K. System boards with jury-rigged connectors, and design changes even support doesn' t know about. I don't see how this crap will even outlast the warranty. Plenty of system failures. Support personnel have been decimated, sometimes you get the old hands who are good but more often than not you get somebody who worked at Burger King last month and now they're a computer "expert" reading from their prepared script and acting like we don't know anything. I really don't expect Lenovo to last very long when you can look inside a Dell or HP box and see at least some degree of quality. To top it off we have to beg for parts to fix their problems, like we can wave a magic wand and bring a dead processor back to life. If you're shopping for a PC or laptop, better look elsewhere. Sign me: Glad to be out of BigBlue. -Anonymous-
    • Comment 1/11/08: I just got a phone call from a law firm called Cerussi & Sprin. The attorney on the phone told me he was calling on behalf of his client, IBM! Apparently, someone is suing IBM for using Asbestos in their printer, collator, and sorter products. He had my name, address, and phone number correct. He said IBM gave his firm a list of employees to ask questions about whether they knew if IBM used asbestos in any of their products in the early 1970's and previously. Anyone else get the same phone call? -Somebody-
  • Pension Comments page
    • Comment 1/8/08: If the stock market doesn't recover soon or make it back to DOW 14000+ and beyond our 401k+ will be no way near a replacement for a frozen pension plan. It is clear that for older employees who just had their pension frozen, time is not on your side for recouping funds lost with a frozen pension in a 401k+ plan. -Anon-
    • Comment 1/9/08: I see lots of messages about how the frozen pension would affect older employees. I retired in 2006 at 56, but since I never received a pay raise after hitting age 50, my pension was effectively frozen. It wasn't because of performance, as I was was always chosen to lead new projects. or take over projects that were having trouble. I was told that I had already had my pay raises, and the younger people would be getting what money was available. I was also told that I didn't get stock options because my "future time horizon" would not permit full vesting. That came from my second line manager. The options all proved to be pretty worthless anyway. I think for many older employees, the situation is similar. At least the ones that I knew told the same stories. Frozen pensions have been the norm for a long time. Remember IBM does not practice age discrimination. There is no need to practice when they are so good at it. -Anonymous-
    • Comment 1/11/08: Palmisano on deciding to freeze employee pensions: "..personally it was a very hard decision for me.." Huh? You got your SERP Sammy boy. Sure, your SERP is also frozen with your regular IBM pension now but I really feel for you that you have to live on a "fixed income" in retirement at about $7000 a day. I guess you'll have to find creative ways to live off just that amount :) Didn't IBM start up the SERP when Gerstner took the helm? He was shocked IBM didn't have a "supplemental executive retention program" since IBM executives were leaving in droves (?) and needed incentive to stay. Not too many executives left and almost all the top ones are still working as IBM executives. We all know it was set up as a "Senior Executive Retirement Plan". That's what the SERP really is! The executives ensured they got their real pension before the mess they created started. -Anonymous-
    • Comment 1/12/08: With regard to the recent post about IBM exec's having SERP, the poster couldn't be more correct. What I find interesting above and beyond the fact that IBM exec's are given SERP, is that many senior exec's have employment contracts with IBM as well! How ironic that the exec's understand and desire the protections written into an employment contract, but we employee's don't! What does that say to you? One thing it tells me is that the very people who made the decision to freeze our pensions, just like many of us, do not trust the IBM corporation either!! Who knows what a clause written in those individual contracts might guarantee an exec. One thing is for certain though, the exec's make damn sure they can sue IBM in a court of law, should IBM try to reneg on anything written into their employment contract. -Anonymous-

      Alliance reply: You are correct. A contract is negotiated between the company and the executives they hire. Not all executives get contracts, but those that do, have an iron-clad agreement with the company. The employees deserve the same. That's what Alliance@IBM has advocated and continues to advocate. If you want a contract, you have to organize and work to get one. It will be worth it once you have it.

  • Raise and Salary Comments
  • PBC Comments
    • Comment 1/12/08: Prior Yr PBC = 2+; This Yr PBC = 3; This Yr Bonus = 0; Prior Yr Bonus = 0; Message = 2% salary increase last yr. Dead Man walking in 2008.. -Dead Man walking-
  • International Comments
    • Comment 1/9/07: Country = Canada; Union Affiliate = NO; Job Title = Support Spec.; IBM Division = ITD/NSD Canada; Message = IBM US NSD employees will be joining AT&T on Feb1, does anyone know about a Canadian move? -Future AT&T employee-
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.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.