Transfer of pension fund from represented to management

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Transfer of pension fund from represented to management

Joined: 24 Nov 2008, 14:47

17 Feb 2016, 02:36 #1

An article appeared in the Columbus, Ohio Dispatch regarding a transfer of $3B from the Alcatel-Lucent pension fund for represented employees to the management pension fund, along with a transfer of 20,000 retired employees. I don't recall reading about this on the LRO website or news posts. Can someone from LRO comment? Here is the article that appeared in today's Dispatch. ... -plan.html

In case the link is only for Dispatch customers, here is the article.

Union worries about future of pension plan
By Mark Williams
The Columbus Dispatch • Tuesday February 16, 2016 5:00 AM

A decision by telecom company Alcatel-Lucent to move $3 billion out of a well-funded pension fund for retired workers into a fund for managers has union leaders worried about the long-term stability of the retirees' fund.
"It is an excuse to put money into their underfunded plan," said Lew Ellingson, assistant to the vice president for telecommunications and technologies for the Communication Workers of America, which represents Alcatel-Lucent workers. "They should have put their operating funds into it."
The concern is that shifting money from the retired workers' plan could lead to lower benefits for them in the future, he said.
Alcatel-Lucent, which once employed more than 10,000 people at a sprawling operation on the East Side, made the transfer last year before completion of the sale of the company to Finnish telecom company Nokia.
Alcatel-Lucent has three pension funds: one for those who are retired, one for management and one for current workers. It is not clear how many people in the Columbus area are covered by the retirees' plan.
In September, the company notified the CWA of its plan to take the $3 billion along with 20,000 retirees and move them out of the pension fund for the workers and into the managers' fund, Ellingson said.
Ellingson said the retired workers' fund, after the shift, covers 27,000 retirees and dependents. The fund also maintains a health plan that the company says is adequately funded through 2019.
Cloyce Myers, 77, of Canal Winchester, who retired in 1993 when AT&T owned Lucent, contends that the money isn't supposed to be taken out of the fund this way.
"I don't like it all," he said. "They're taking $3 billion out of our pension. ... That's jeopardizing our pension, our health insurance and our death benefits."
The union sued in December to block the transfer, saying it violates the labor agreement between the company and the union. A federal judge in New Jersey refused to grant a temporary order to stop the transfer, but the case will continue.
Nokia did not respond to emails seeking comment. In the ruling, the judge noted that the fund transfer is the fourth that the company has made since 2010.
The company also argued that the union does not represent retirees and that the company has the final word on how to fund the retirement plans.
In addition to the lawsuit, workers and retirees have been writing letters to Congress and have been holding demonstrations outside of Nokia facilities in the U.S., including its offices in Dublin.
Art Plas, president of CWA Local 4390, which represents 102 workers in Ohio, said he believes Nokia wants to ultimately rid itself of the pension plans by selling them to an insurance company.
"Because it is overfunded, somebody is going to get that money," he said of the retirees' plan.

Site Admin
Joined: 27 Dec 2006, 23:00

13 Mar 2016, 20:03 #2

The hearing is in a Federal Court in New Jersey. The last court filing was March 3, 2016. Oral arguments are scheduled for April 18, 2016.

Joined: 09 Jun 2008, 21:40

13 Mar 2016, 22:11 #3

It's called de-risking. A growing number of employers are making plans to "de-risk" their pension plans. That's jargon for reducing the financial risk posed to corporate balance sheets by pension plans. General Motors' de-risking plan also included a plan to buy a group annuity from Prudential for a large group of retirees who opted not to accept the lump sum offer. In these deals, pensioners continue to receive their full benefits, but the annuities lack the protection provided by the Pension Benefit Guarantee Corp, which takes over a plan and its benefit obligations if a sponsor goes belly-up.

Joined: 23 Jan 2009, 18:28

14 Mar 2016, 13:03 #4

When will this happen?

Site Admin
Joined: 27 Dec 2006, 23:00

17 Mar 2016, 14:10 #5

This is a complicated topic because of both the financials and regulatory considerations. The NRLN has a position paper at ... 0Paper.pdf
The insurance industry from it's business viewpoint explains the process at ... 0737437897
Many commentators say that an oncoming change in the IRS requiring longer life expectancy tables will increase pension funding requirements. The pension obligations inherited from AT&T/Lucent already are larger than the market value of Alcatel-Lucent when acquired.
- Bottom line: it's unclear if, or when, a decision could be made. There's nothing in the acquisition documents that talk to this point.