Welcome to IBM Employee News and Links

Quick Links:

Get involved! Insider trading After IBM Lenovo Employee Discount

Previous highlights:

March 6, 2010 February 27, 2010 February 20, 2010 February 13, 2010 February 6, 2010 January 30, 2010 January 23, 2010 January 16, 2010 January 9, 2010 January 2, 2010 December 26, 2009 December 19, 2009 December 12, 2009 December 5, 2009 November 28, 2009 November 21, 2009 November 14, 2009 November 7, 2009 October 31, 2009 October 24, 2009 October 17, 2009 October 10, 2009 October 3, 2009 September 26, 2009 September 19, 2009 September 12, 2009 September 5, 2009 August 29, 2009 August 22, 2009 August 15, 2009 August 8, 2009 August 1, 2009 July 25, 2009 July 18, 2009 July 11, 2009 July 4, 2009 June 27, 2009 June 20, 2009 June 13, 2009 June 6, 2009 May 30, 2009 May 23, 2009 May 16, 2009 May 9, 2009 May 2, 2009 April 25, 2009 April 18, 2009 April 11, 2009 April 4, 2009 March 28, 2009 March 21, 2009 March 14, 2009 March 7, 2009 February 28, 2009 February 21, 2009 February 14, 2009 February 7, 2009 January 31, 2009 January 24, 2009 January 17, 2009 January 10, 2009 January 03, 2009 December 27, 2008 December 20, 2008 December 13, 2008 December 6, 2008 November 29, 2008 November 22, 2008 November 15, 2008 November 8, 2008 November 1, 2008 October 25, 2008 October 18, 2008 October 11, 2008 October 4, 2008 September 27, 2008 September 20, 2008 September 13, 2008 September 6, 2008 August 30, 2008 August 23, 2008 August 16, 2008 August 9, 2008 August 2, 2008 July 26, 2008 July 19, 2008 July 12, 2008 July 5, 2008 June 28, 2008 June 21, 2008 June 14, 2008 June 7, 2008 May 31, 2008 May 24, 2008 May 17, 2008 May 10, 2008 2008 Stock Meeting April 26, 2008 April 19, 2008 April 12, 2008 April 5, 2008 March 29, 2008 March 22, 2008 March 15, 2008 March 8, 2008 March 1, 2008 February 16, 2008 February 9, 2008 February 2, 2008 January 26, 2008 January 19, 2008 January 12, 2008 January 5, 2008 December 29, 2007 December 22, 2007 December 15, 2007 December 8, 2007 December 1, 2007 November 24, 2007 November 17, 2007 November 10, 2007 November 3, 2007 October 27, 2007 October 20, 2007 October 13, 2007 October 6, 2007 September 29, 2007 September 22, 2007 September 15, 2007 September 8, 2007 September 1, 2007 August 25, 2007 August 18, 2007 August 11, 2007 August 4, 2007 July 28, 2007 July 21, 2007 July 14, 2007 July 7, 2007 June 30, 2007 June 23, 2007 June 16, 2007 June 9, 2007 June 2, 2007 May 26, 2007 May 19, 2007 May 12, 2007 May 5, 2007 2007 Stock Meeting April 21, 2007 April 14, 2007 April 7, 2007 March 31, 2007 March 24, 2007 March 17, 2007 March 10, 2007 March 3, 2007 February 24, 2007 February 17, 2007 February 10, 2007 February 3, 2007 January 27, 2007 January 20, 2007 January 13, 2007 January 6, 2007 December 30, 2006 December 23, 2006 December 16, 2006 December 9, 2006 December 2, 2006 November 25, 2006 November 18, 2006 November 11, 2006 November 4, 2006 October 28, 2006 October 21, 2006 October 14, 2006 October 7, 2006 September 30, 2006 September 23, 2006 September 16, 2006 September 9, 2006 September 2, 2006 August 26, 2006 August 19, 2006 August 12, 2006 August 5, 2006 July 29, 2006 July 22, 2006 July 15, 2006 July 8, 2006 July 1, 2006 June 24, 2006 June 17, 2006 June 10, 2006 June 3, 2006 May 27, 2006 May 20, 2006 May 13, 2006 May 6, 2006 2006 Stock Meeting April 22, 2006 April 15, 2006 April 8, 2006 April 1, 2006 March 25, 2006 March 18, 2006 March 11, 2006 March 4, 2006 February 25, 2006 February 18, 2006 February 11, 2006 February 4, 2006 January 28, 2006 January 21, 2006 January 14, 2006 January 7, 2006 December 31, 2005 December 24, 2005 December 17, 2005 December 10, 2005 December 03, 2005 November 26, 2005 November 19, 2005 November 12, 2005 November 5, 2005 October 29, 2005 October 22, 2005 October 15, 2005 October 8, 2005 October 1, 2005 September 24, 2005 September 17, 2005 September 10, 2005 September 3, 2005 August 27, 2005 August 20, 2005 August 13, 2005 August 6, 2005 July 30, 2005 July 23, 2005 July 16, 2005 July 9, 2005 July 2, 2005 June 25, 2005 June 18, 2005 June 11, 2005 June 4, 2005 May 28, 2005 May 21, 2005 May 14, 2005 May 7, 2005 April 30, 2005 April 23, 2005 April 16, 2005 April 9, 2005 April 2, 2005 March 26, 2005 March 19, 2005 March 12, 2005 March 5, 2005 February 26, 2005 February 19, 2005 February 12, 2005 February 5, 2005 January 29, 2005 January 22, 2005 January 15, 2005 January 8, 2005 January 1, 2005 December 25, 2004 December 18, 2004 December 11, 2004 December 4, 2004 November 27, 2004 November 20, 2004 November 13, 2004 November 6, 2004 October 30, 2004 October 23, 2004 October 16, 2004 October 9, 2004 October 2, 2004 September 25, 2004 September 18, 2004 September 11, 2004 September 4, 2004 August 28, 2004 August 21, 2004 August 14, 2004 August 7, 2004 July 31, 2004 July 24, 2004 July 17, 2004 July 10, 2004 July 3, 2004 June 26, 2004 June 19, 2004 June 5, 2004 May 29, 2004 May 22, 2004 May 15, 2004 May 8, 2004 2004 Stock Meeting April 24, 2004 April 10, 2004 April 3, 2004 March 27, 2004 March 20, 2004 March 13, 2004 March 6, 2004 February 28, 2004 February 21, 2004 February 14, 2004 February 7, 2004 February 1, 2004 January 18, 2004 December 27, 2003 December 20, 2003 December 13, 2003 December 6, 2003 November 29, 2003 November 22, 2003 November 15, 2003 November 8, 2003 November 1, 2003 October 25, 2003 October 18, 2003 October 11, 2003 October 4, 2003 September 27, 2003 September 20, 2003 September 13, 2003 September 6, 2003 August 30, 2003 August 23, 2003 August 16, 2003 August 9, 2003 Pension Lawsuit Win July 26, 2003 July 19, 2003 July 12, 2003 July 5, 2003 June 28, 2003 June 21, 2003 June 14, 2003 June 7, 2003 May 31, 2003 May 24, 2003 May 17, 2003 May 10, 2003 2003 Stock Meeting April 26, 2003 April 19, 2003 April 12, 2003 April 5, 2003 March 29, 2003 March 22, 2003 March 15, 2003 March 8, 2003 March 1, 2003 February 22, 2003 February 15, 2003 February 8, 2003 February 1, 2003 January 25, 2003 January 18, 2003 January 11, 2003 January 4, 2003 December 28, 2002 December 21, 2002 December 14, 2002 December 7, 2002 November 30, 2002 November 23, 2002 November 16, 2002 November 9, 2002 November 2, 2002 October 26, 2002 October 19, 2002 October 12, 2002 October 5, 2002 September 28, 2002 September 21, 2002 September 14, 2002 September 7, 2002 August 31, 2002 August 24, 2002 August 17, 2002 August 10, 2002 August 3, 2002 July 27, 2002 July 20, 2002 July 13, 2002 July 6, 2002 June 29, 2002 June 22, 2002 June 15, 2002 June 8, 2002 June 1, 2002 May 25, 2002 May 18, 2002 May 11, 2002 2002 Stock Meeting April 27, 2002 April 20, 2002 April 13, 2002 April 6, 2002 March 30, 2002 March 23, 2002 March 16, 2002 March 9, 2002 March 2, 2002 February 23, 2002 February 16, 2002 February 9, 2002 February 2, 2002 January 26, 2002 January 19, 2002 January 12, 2002 January 5, 2002 December 29, 2001 December 22, 2001 December 15, 2001 December 8, 2001 December 1, 2001 November 24, 2001 November 17, 2001 November 10, 2001 November 3, 2001 October 27, 2001 October 20, 2001 October 13, 2001 October 6, 2001 September 29, 2001 September 22, 2001 September 15, 2001 September 8, 2001 September 1, 2001 August 25, 2001 August 18, 2001 August 11, 2001 August 4, 2001 July 28, 2001 July 21, 2001 July 14, 2001 July 7, 2001 June 30, 2001 June 23, 2001 June 16, 2001 June 9, 2001 June 2, 2001 May 26, 2001 May 19, 2001 May 12, 2001 May 5, 2001 2001 Stock Meeting April 21, 2001 April 14, 2001 April 7, 2001 March 31, 2001 March 24, 2001 March 17, 2001 March 10, 2001 March 3, 2001 February 24, 2001 February 17, 2001 February 10, 2001 February 3, 2001 January 27, 2001 January 20, 2001 January 13, 2001 January 6, 2001 December 30, 2000 December 23, 2000 December 16, 2000 December 9, 2000 December 2, 2000 November 24, 2000 November 17, 2000 November 10, 2000 November 4, 2000 October 28, 2000 October 21, 2000 October 14, 2000 October 7, 2000 September 30, 2000 September 23, 2000 September 16, 2000 September 9, 2000 September 2, 2000 August 26, 2000 August 19, 2000 August 12, 2000 July 29, 2000 July 22, 2000 July 15, 2000 July 1, 2000 June 24, 2000 June 17, 2000 June 10, 2000 June 3, 2000 May 27, 2000 May 20, 2000 May 13, 2000 May 6, 2000 April, 2000

Highlights—August 23, 2008

• Rochester (NY) Democrat and Chronicle: Rochester-area retirees suffer from loss of benefits. By Matthew Daneman. Excerpts: After 33 years at Eastman Kodak Co., Don Herring left pretty satisfied. He had climbed fairly high on the job ladder before health problems made him retire from his process engineering job. He had made good money and he was leaving with some guarantees about his future. Then he and tens of thousands of other Kodak retirees received a letter earlier this month informing them that those guarantees about health care and life insurance were gone.

  "They changed the deal," said Herring, 61, of Greece. "I earned it. I worked for it. That was the deal. I don't like feeling powerless."

  Former Kodakers like Herring are part of an increasingly large club of the nation's retirees who find themselves without the post-retirement health-care benefits that their employers had previously promised. Kodak, which has provided such benefits since 1954, is eliminating dental coverage and its life insurance plan, phasing out dependent coverage and shifting future health care cost increases to retirees. ...

  The trend of whittling away company-sponsored retiree health care started in 1982, said Dallas Salisbury, president of the Employee Benefit Research Institute. At that time, financial accounting standards changed to start requiring that companies put a dollar figure on the expected future costs of medical coverage and insurance. While the Employee Retirement Income Security Act of 1974 safeguards pensions, American Benefits Council President James Klein said there are no legal barriers to companies changing retiree health care offerings as long as they have reserved the right to do so with some kind of language in their human resources paperwork — something most every company has been doing for years.

• Yahoo! IBM Retiree Information Exchange: "pension increase" by "thomas365us". Full excerpt: I got my notice, got a whole $83.00 increase after 8 years since last increase. Thought I might get a little more as I have been gone 22 years.
• Yahoo! IBM Retiree Information Exchange: "Re: pension increase" by "Wilmer Haas". Full excerpt: Just received my "Randy MacDonald" Letter! My "pension adjustment" will be all of $44.99 (before taxes etc) starting in Sept.2008. From here that will allow me to just buy 10 gallons of gas to take my wife to the doctor and return without running empty! I retired in March 2000 and don't remember getting any "pension adjustment" since then, only medical costs adjusted upward. Thanks Randy! Will Haas
• Yahoo! IBM Retiree Information Exchange: "Re: pension increase" by "vaporbenefits". Full excerpt: In a letter received today (8/20/08) from R. MacDonald (dated only as August/2008) My pension has been increased just under $50 per month. (based on my situation.) First "adjustment" in 18 YEARS.
• Yahoo! IBM Retiree Information Exchange: "Re: pension increase" by "Gene Ehrich". Full excerpt: Got mine too for just a penny more. $45 per month before taxes.
• Yahoo! IBM Retiree Information Exchange: "Re: pension increase" by "flatsflyer". Full excerpt: The "Scumbags" running IBM are cheap except when dealing with themselves. If Sam, Randy or any of the other 3,500 Greedy Bastards gave up 1% of their perks, bonuses, etc. everyone could have been granted a 25% increase. I say FUCK them...
• Yahoo! IBM Retiree Information Exchange: "No Money for Me" by "ramacjoe". Full excerpt: I just called IBM HRC and found out that I will not receive an increase because my Core Benefit amount is above the cut off level of $1833.33. They also said that no notices would be sent out explaining why one was not receiving an increase. My Core Benefit with 50% survivor is above that amount. What I actually receive is less than the "Cut Off" amount because of the calculation for my survivor. I retired in Dec '89 If you haven't received a notice, suggest that you call them at 1-800- 796-9876 Joe in Fort Lauderdale
• Yahoo! IBM Retiree Information Exchange: "Re: No Money for Me" by "tradewinds022002". Full excerpt: I haven't received any letter so I can assume that no raise is coming. I am disappointed but I blame myself for not having enough money to live decently. Instead of buying dark suits, white shirts and black shoes and a new car every 3 years, because my car had excessive mileage, sending our daughter to a collage, I should have save the money for our old age, but then again I listen to my manager who told me repeatedly that IBM will take care of me in my old age, so basically it is clear to me that it is my fault. Disappointed George
• Fairfield County Business Journal: A new Gilded Age emerging. By Maureen Morgan. Excerpts: Holly Sklar, co-author of “Shifting Fortunes: The Perils of the Growing American Wealth Gap,” has a stunning example of just how in orbit the pay for CEOs has risen. When Coca-Cola CEO Douglas Ivester resigned after only a two-year stint he had accomplished a negative 7.3 percent for shareholders. For that benefit to the company he was rewarded with stock, options and other benefits worth $120 million. Meanwhile, Coca-Cola is laying off thousands of workers and facing a lawsuit alleging the company discriminated against black employees in promotions, pay and performance. As Sklar points out, average workers are digging their way out after years of falling real wages, and now falling housing prices and rising food and fuel prices, while CEOs pay packages are soaring to heights once reserved for a handful of robber barons. Many have called this period a new Gilded Age.

  One would have thought that in fairness the workforce should have benefited from the increased productivity during the last four decades. It didn’t happen. During the dynamic period in the 1990s, the earnings of mathematicians and computer scientists increased by only 4.8 percent, while earnings of engineers actually declined by 1.4 percent. Could this be the reason this country is running out of engineers? Meanwhile, the earnings of CEOs have increased by 100 percent. The growing mismatch between skills and economic rewards, a cornerstone of the American work ethic, has become wildly out of sync. As discussed in “Unequal Democracy,” by Larry M. Bartels – “On the one hand, labor productivity and output growth exploded; on the other hand median family income fell by 3.8 percent from 1999 to 2004.” ...

  Bartels notes that while there is certainly no uprising in the population over the growing inequity now obvious to everyone, there is still substantial resentment that the rich and the corporations do not pay their fair share and that the tax system is not progressive enough. Nonetheless, Americans, on average, have a higher tolerance for income inequality than our European counterparts. Americans focus on equality of opportunity, while Europeans tend to see fairness in equal outcomes. Unsurprisingly then, CEO pay packages in Europe have not seen the astronomic increases that we see here at home. Which raises the question – are CEOs in this country that much more productive than those, say, in Europe or in Japan? Hardly! There is nothing to suggest such a conclusion. If workers were paid way beyond what their perceived productive worth to the company there would be a great hue and cry. Not so with extravagant CEO pay. Not only are the lofty pay rates currently offered to CEOs unrelated to productivity, it is not affected by losses that occurred under the CEO’s watch, as witnessed by Ivester.

  For the most part, the true size of these packages is unknown outside of the boardroom because it involves the right to buy shares at a below-market rate. This is a clear cost to the corporation because it involves issuing new shares of stock, thus lowering the value of the existing shares. An attempt on the part of the Financial Standards Board to declare this practice constitutes an expense to the corporation and should be treated as such, was beaten down by the ubiquitous lobbyists. Corporate executives claimed that accurate accounting would significantly lower their share prices, therefore the publicly stated profit. Well, exactly. So much for fiduciary accuracy in the corporate world. ...

  Incredibly, there is little outrage in the nation as CEOs continue to hollow out U.S. corporations. There is little redress in Congress where elected officials tend to have little time for members of the middle or lower classes, giving the most attention to those members of the public who may be donors in the next election. Until the public begins to put together the picture of an economy that has forgotten what it is to be American and figure out how to vote its own interests the country is truly in serious trouble.

  Economists and policymakers are fond of referring to the fact that the overall economy is growing and that, of course, a rising tide lifts all boats. “Picture a buoyant luxury cruise ship surrounded by dilapidated dinghies, full of holes and on the verge of sinking. The fact that the tide has lifted them does not mean they are doing well.”

• MoneySmart: Target-Date Fund Fees Can Add Up. By Paulette Miniter, Excerpts: One-stop shopping often means lower prices. Wal-Mart for groceries, Orbitz for travel, Schwab for financial services. But it's not always the case. Take the increasingly popular "target date" mutual funds that are luring investor dollars by the billions these days. These funds divvy up your money for you according to when you plan to retire, growing more conservative as you get older. By putting money into just one of these guys, you get exposure to a range of assets — from domestic and international stocks, to corporate and government bonds. Hence the one stop. ...

  But the average target fund has an annual expense ratio of 1.22%. That's cheaper than the 1.37% for the average diversified U.S. stock fund, but ideally you should expect to pony up less than 1%, Carlson says. "With a fund designed to be held for decades, costs can really make a big difference."

• BusinessWeek: Now Wall Street Wants Your Pension, Too. JPMorganChase, Citi, Cerberus, and Morgan Stanley are among the firms lobbying Washington to let them take over and run corporate pension funds. By Matthew Goldstein. Excerpts: The folks who brought you the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock have another bold idea: buying up and running troubled corporate pension plans. And despite the subprime fiasco, some regulators may soon embrace Wall Street's latest scheme. ...

  In preparation for that moment, the world's biggest big investment banks, insurers, hedge funds, and private equity shops have been quietly laying the groundwork for such deals over the past year. They would be a big prize for Wall Street. The $2.3 trillion pension honey pot has $500 billion in "frozen plans" that are closed to new employees and whose benefits are capped, including those at IBM, Hewlett Packard, Verizon, and Alcoa.. And that figure could triple by 2012, according to consulting firm McKinsey. By managing those troubled plans, Wall Street also gains entrée to an appealing set of customers to whom it can sell a broad array of fee-generating products. "We have identified several clients who would be willing to be first to sell a plan," says Scott Macey, a senior vice-president at Aon Consulting. "But the question is, when is a good time for this?" ...

  But the gambit to turn pensions into for-profit enterprises raises troubling questions. Critics, including some on Capitol Hill, worry that financial firms don't have workers' best interest at heart, which would put some 44 million current and future retirees at risk. "We think it's just a terrible idea," says Karen Friedman, policy director for advocacy group Pensions Rights Center. "In the wake of the subprime crisis, it would be crazy to allow financial institutions to manage these plans." ...

  Wall Street's Dumping Ground Historically, pension funds have been managed conservatively, in keeping with the broad goals of long-term wealth accumulation. Alternative investments such as hedge funds, derivatives, and asset-backed securities represent less than 25% of pension assets. If financial firms get involved, exotic investments could swell to 50% of pensions assets by 2012, predicts McKinsey. The biggest fear is that Wall Street could use retirement portfolios as a dumping ground for its most toxic and troublesome investments. It's not unlike what regulators allege UBS officials did with its stockpile of risky auction-rate securities by trying to off-load them to wealthy clients.

  If Wall Street gambles with those pension assets and loses, U.S. taxpayers would probably foot the bill. When a company with a pension goes belly up today, the PBGC, under federal law, has to take on the fund's obligations and dole out money to its beneficiaries. It's a costly burden: The PBGC currently runs a $14.1 billion deficit.

• Yahoo! IBM Pension and Retiree Issues message board: "Re: Financial Firms Trying To Buy Out Frozen Pension Plans" by "emmkaytee". Excerpts: When I got around to reading my BW last week and saw this article I literally thought I was going to throw up. Then I got *really* mad. The people who brought us the subprime meltdown should be in jail, but, no, instead our government is considering rewarding them by handing our pensions over to them. Seriously, when I read this in the middle of the night I considered attempting to ferret out the home phone number of my (vacationing) Rep and calling him then and there...'til I remembered that he's a multimillionaire in a city hundreds of miles away (gerrymandering), who doesn't give a rat's ass whether I starve to death.

  These guys (investment "banks") have run out of money to play with to justify their high salaries, which are awarded based on fees for flipping money around, not for increasing the value of the money. Some of them actually make more money if the principal *loses* value. They just need something to bet with/on, and they have lost all credibility with which to attract legitimate investments. (And the top execs, of course, simply get money for nothing--huge piles of it--even if their enterprises lose every single asset and collapse around their feet.)

• Yahoo! IBM Pension and Retiree Issues message board: "Re: Financial Firms Trying To Buy Out Frozen Pension Plans" by "more4data". Full excerpt: Is everyone sure that unloading pension obligations to a third party is such a bad idea - it might be worth some more analysis and discussion.

  For me, who is expecting a substantial early retirement benefit, if IBM were to run into financial problems down the road - say 10 or 20 years from now, having the PBGF take over my pension would be a disaster, and IBM won't give me anything close to the cash value of the annuity they will pay me, so at the moment I'm stuck with the prospect of IBM managing my pension. On the other hand, If IBM were to purchase an annuity from a large financial company (Citigroup, NY Life, Met Life, etc.) some of which are multi-trillion dollar companies, it might actually be a safer situation than leaving it with the IBM management team who has little interest in retiree welfare.

  At any rate, it would essentially finalize the "divorce" from IBM and I have no problem getting a check from a non-IBM source. On the other hand, it would practically eliminate the possibility of getting a benefit increase in the future, although I'm surely not counting on that anyway.

  The most critical part of this seems to be what are the legal responsibilities of the third party, and how can regulations be formulated to make this third party option safer. There are no guarantees for the future, but I might be tempted to trust a bank or insurance company rather than IBM (even with the ERISA pension rules in place) - maybe that's a sad commentary on current affairs.

• Yahoo! IBM Pension and Retiree Issues message board: "Re: Financial Firms Trying To Buy Out Frozen Pension Plans" by "madinpok". Full excerpt: History has shown time and again that the banks and brokerages can not be trusted to manage your money without putting their interests ahead of yours. Just recall the S&L scandal, mutual funds trading after the markets closed to allow certain people to make guaranteed profits, the current mortgage meltdown... the list goes on. In most cases, when things collapsed, the little guy is hurt the most - not the bankers or brokers (although a few had to do some prison time, most got away scot free with a ton of money). If you think that IBM has little interest in the retirees' welfare, I would say that Wall Street has even less. They smell big money and are looking at how much they can steal, pure and simple.

  As far as IBM purchasing an annuity from an insurance company goes, I'm not so sure it would be any safer. The insurance companies seem to be able to get themselves in financial trouble almost as easily as the banks do. And, in order for IBM to provide you with an insurance company annuity equal to your pension, it would probably would cost them more than it would if they simply paid you directly. The insurance company needs to make a profit, you know. So I doubt IBM would do it.

  IBM's pension fund has been managed pretty well over the years. Since the pension plan is now frozen, the door has been pretty much closed to IBM increasing profits by reducing pension benefits. They can still profit indirectly with tax credits by having a surplus in the fund, but having a surplus is also in the retirees interest

  If the pension fund drops below the 100% funded level, IBM is still obligated to make contributions to the fund to bring it up to 100%. If the fund were to be sold off to Wall Street, who would be on the hook in that case? You can bet that the banks and brokerages will do some heavy bribing (uh... lobbying) of our elected representatives to make sure that they aren't on the hook in that case.

  If IBM were to go bankrupt, it does not necessarily mean that the pension fund would also be in trouble. They are two separate entities. If IBM is in financial trouble, it cannot touch the pension fund. As long as the pension fund is 100% funded, you would not see any reduction in your pension, even if IBM were to go bankrupt.

  The steel companies, airlines, etc, got into trouble with their pension funds because they allowed them to become severely underfunded and then the companies were in too bad a shape to fix the funding problem. With the tighter pension regulations that have been put in place, hopefully, that will not happen in the future - to IBM or any other company.

• Yahoo! IBM Pension and Retiree Issues message board: "Re: Financial Firms Trying To Buy Out Frozen Pension Plans" by "emmkaytee". Full excerpt: I don't think it would be that blatant. That would require even more legal changes. I'm assuming that they are hoping to repeat exactly the scenario that they used for mortgages--some sort of CDO scam. In this case the "collateral" would be our pensions.

  Before 2000, the mortgage scam was illegal, as is this pension scam currently, which is where Congress comes in. The Bush Administration tried a head on move to turn our pension funds over to these guys, and Treasury said "Nope, that's not legal. Legally, IBM, or whoever, is responsible for paying these pensions." The next step is to get Congress to change the law (as they did for mortgages in 2000), so that IBM is no longer responsible, and can turn that responsibility over to Bear Stearns. Oops, out of business. Make that JP Morgan...plus the US taxpayer.

  Since the same people who ran the mortgage scam are still scamming, I assume they would just try the same deal over again, if Congress allows it, and this time they would throw all the pensions into a big pot, slice it up like meatloaf, and sell off the pieces as securities. As with mortgages, eventually the pot would become overloaded with shaky pensions, or even sham pensions (as happened with mortgages), and the whole thing would collapse. I don't know how long it would take to play out. The mortgage debacle became legally possible in 2000, started going south in about 2003, and crashed in 2007.

  Until the meltdown, you wouldn't see any change in your pension (unless Congress also gets rid of the other pension protections that are in place--I really don't trust these guys). After the meltdown, assuming the PBCG is still in place, you would probably start getting a reduced pension. BUT...the bailout would be huge, and frankly I don't think we-the-people would be able to afford it, so you might end up getting a *really* reduced pension. Under the current laws, IBMers are covered better by the PBCG than many others because our pensions suck. If I had a high-dollar pension I would be *really* worried.

  Not to get too political, but we *do* have a different slant in Congress at this point and a much higher level of awareness in the public. In 2000, nobody knew what Phil Gramm and his pals in Congress were up to when they cleared the way for Bear Stearns on mortgages. Now, however, we even have institutions like BusinessWeek saying "You want to do WHAT????". So, in reality, I think this might be a pretty hard sell with Congress.

  As Kathi and others are saying, though, we need to keep an eye on them and make sure that they know that we understand how the mortgage meltdown played out, and that we will seek retribution if the same thing happens with pensions.

  Then again, I could be wrong about exactly why they want to get their hands on this money. Maybe it's more like a check-kiting scam, and they just want to temporarily cover more bad debts. The real question is: Why would anybody trust these organizations with a big pile of their money?

  It's very hard to find anybody who will admit to having understood the whole mortgage scam as it was happening. If it happens again, though, we really don't have any excuse. *We* are responsible this time.

• Reuters: Carlyle Chairman Gerstner to retire. By Megan Davies. Excerpt: Carlyle Group CYL.UL, one of the world's largest private equity firms, said on Tuesday Chairman Louis Gerstner will retire and become a senior adviser to the company's buyout funds. Gerstner, who held the post from January 2003, said in the statement he had a number of goals and interests yet to fulfill "requiring me to step back at Carlyle."
• Yahoo! IBM Pension and Retiree Issues message board: "Re: Carlyle Chairman Gerstner to retire" by "ibmmike2006". Full excerpt: Probably the 20 Million shares of IBM stock options he awarded himself in 1998 that matured June 30, 2008 at a $53 strike price has filled up his retirement sock well enough so he will not have to worry about gas prices, inflation, medical costs or foreclosure on his home.
• Yahoo! IBM Pension and Retirement Issues message board: "Re: Question about the grandfathered health plan" by "madinpok". Full excerpt: The old health plan and the newer FHA plan are identical in terms of the coverage options they provide. The difference is in what they will cost you. Retirees under the old plan get a subsidy from IBM, while the FHA plan retirees pay the full cost (with some help from their FHA account for as long as the money lasts). IBM's subsidy for the retirees covered under the old plan is capped at an average of $7000 per year for pre-medicare retirees and $3000 for retirees covered under medicare. How much IBM is really paying towards the subsidy is the subject of much debate.

  Each year, you have the option to enroll in the IBM plan that you think is best for you. If you have coverage from another source, such as another employer or a spouse's plan, you can choose to opt out of the IBM plans for that year. You can re-enroll in the future, as long has you have had continuous coverage elsewhere in the interim.

  I've created a folder in the files section of this group titled "IBM Retirement Benefit Info." In this folder are:

  • IBM USHR113, which is the summary plan description for the pension plan.
  • SHR112, which describes other, non-pension benefits for retirees, such as the health plans.
  • he 2008 retiree benefit enrollment guide, which shows you the options that were available for the current year. The 2009 version will be coming out in a few months.
  • A file showing the 2008 costs for the FHA and non-FHA medical plans.

• New York Times editorial: The Corporate Free Ride. Excerpts: Here is a crazy idea to address the United States’ gaping fiscal deficit: persuade corporate America to start paying taxes. An investigation by the Government Accountability Office found that almost two-thirds of companies in the United States usually pay no corporate income taxes. Big companies, those with more than $50 million in sales or $250 million in assets, are less likely to avoid Uncle Sam altogether. Still, about a quarter of them report no tax liability either. ...

  We find it hard to believe that some two-thirds of American companies fail to turn a profit. What we find easier to believe is that corporations have become increasingly skilled at tax-avoidance strategies, including transfer pricing — overcharging their American units for products and services provided by subsidiaries abroad to artificially reduce their profits here.

  The first place to look for money to close the budget deficit should be among the high-income individuals who have been treated so generously by the Bush administration. But corporate America has been getting a free pass for far too long. And the seeming ease with which corporations escape the taxman altogether compounds a fundamental unfairness in the American economy. Even as corporate profits have soared — reaching a record of 14.1 percent of the nation’s total income in 2006 — the percentage of these profits paid out in taxes is near its lowest level since the 1930s.

• New York Times op-ed: It’s the Economy Stupor. By Paul Krugman. Excerpts: By rights, John McCain should be getting hammered on economics. After all, Mr. McCain proposes continuing the policies of a president who’s had a truly dismal economic record — job growth under the current administration has been the slowest in 60 years, even slower than job growth under the first President Bush. And the public blames the White House, giving Mr. Bush spectacularly low ratings on his handling of the economy.

  Meanwhile, The Times reports that, according to associates, Mr. McCain still “dials up” Phil Gramm, the former senator who resigned as co-chairman of the campaign after calling America a “nation of whiners” and dismissing the country’s economic woes as nothing more than a “mental recession.” And Mr. Gramm is still considered a top pick for Treasury secretary.

• New York Times: Obama Camp Puts Forward More Modest Tax Changes. By Larry Rohter. Excerpt: Senator Barack Obama appears to be altering his proposals for extending Social Security payroll taxes and raising the capital gains tax, by delaying the increases or scaling them back. Mr. Obama, the presumptive Democratic nominee for president, has not abandoned either his support for a higher tax rate on capital gains or his proposal to subject individual wages above $250,000 to the Social Security payroll tax. But recent statements by campaign aides suggested that the latest iterations of the plans are more modest. On Thursday, for example, Mr. Obama’s chief economic adviser, Jason Furman, said that the Social Security payroll tax extension favored by Mr. Obama would only go into effect in a decade, after he had left office.
• U.S. News & World Report: 3 Reasons Pensions Need Less Funding per Worker Than 401(k)'s. By Emily Brandon. Excerpt: 401(k) plans save employers money because workers fund a portion of them. But a new analysis says 401(k)'s are an inefficient way to finance a secure retirement. The nonprofit National Institute on Retirement Security calculated that a 62-year-old with a final salary of $50,000 would need to have $550,000 in a 401(k) to have an adequate retirement income, determined by the authors to be $26,684 a year. To achieve the same income, a traditional pension would need to have only $355,000 set aside for that worker, nearly $200,000 less.
• Associated Press, courtesy of the New York Times: Washington offers no relief for savers. Two giant mortgage companies get into hot water over risky investments. The government steps in to throw them a lifeline should they need it.

  Hundreds of thousands of Americans buy homes more expensive than they can afford. Congress approves a rescue package.

  Troubles erupt at a Wall Street investment firm that made bad bets on mortgage investments. The Federal Reserve steps in and provides financial backing for the company's takeover.

  Meanwhile, tens of millions of people pay their mortgages on time, don't max out their credit cards and put money into retirement funds. They may even save a little extra on the side.

  In return, they get rates on their savings that don't even keep up with inflation. They also are witnessing the horror of their nest eggs shrinking as the value of their homes plummets and the stock market tumbles.

  Washington policymakers seem more focused on rescuing those who behave badly by putting at risk taxpayers who've played by the rules and shunned the get-rich-quick schemes of Wall Street croupiers. If the government can toss a lifeline to troubled mortgage underwriters Fannie Mae and Freddie Mac, they why won't they do something for Americans who save their money? ...

  The average rate on a one-year CD these days is around 2.3 percent, according to Bankrate.com. However, inflation has been rising closer to 5 percent over the past year, so savers are seeing their returns wiped out. ''Savings are taking it on the chin,'' says Greg McBride, senior financial analyst at Bankrate.com. ''The Fed's rate cuts geared to aiding ailing homeowners with adjustable-rate mortgages have come at the expense of savers and retirees dependent on fixed income,'' he said. ''For the past 12 months, there has been a double whammy for savers as interest rates have fallen and inflation has increased.'' ...

  Middleton, 32, who once worked in the information-technology field and is now self employed, says he was spurred to put on an ''activist hat'' earlier this year. That's when the Fed provided a loan of $28.82 billion as part of JPMorgan's takeover of the ailing Bear Stearns. ''I was outraged. These companies make their decisions and their bets and they should be responsible for that. They should not be bailed out on the backs of the taxpayers,'' he said.

• New York Times op-ed: Now That’s Rich. By Paul Krugman. Excerpts: Last weekend, Pastor Rick Warren asked both presidential candidates to define the income at which “you move from middle class to rich.” The context of the question was, of course, the difference in the candidates’ tax policies. Barack Obama wants to put tax rates on higher-income Americans more or less back to what they were under Bill Clinton; John McCain, who was against the Bush tax cuts before he was for them, says that means raising taxes on the middle class.

  Mr. Obama answered the question seriously, defining middle class as meaning an income below $150,000. Mr. McCain, at first, made it into a joke, saying “how about $5 million?” Then he declared that it didn’t matter because he wouldn’t raise anyone’s taxes. That wasn’t just an evasion, it was a falsehood: Mr. McCain’s health care plan, by limiting the deductibility of employer-paid insurance premiums, would effectively raise taxes on a number of people.

  The real problem, however, was with the question itself. When we think about the middle class, we tend to think of Americans whose lives are decent but not luxurious: they have houses, cars and health insurance, but they still worry about making ends meet, especially when the time comes to send the kids to college.

  Meanwhile, when we think about the rich, we tend to think about the handful of people who are really, really rich — people with servants, people with so much money that, like Mr. McCain, they don’t know how many houses they own. (Remember how Republicans jeered at John Kerry for being too rich?)