Verizon Retirees' Lawsuit to Protect Pensions

Share your experiences with pensions, benefits, and retirement during 2012 for other to read and share back.

Verizon Retirees' Lawsuit to Protect Pensions

mendomann
Joined: 09 Jun 2008, 21:40

05 Dec 2012, 20:59 #1

NRLN President's Forum
Verizon Retirees' Lawsuit to Protect Pensions

Verizon management retirees filed a federal lawsuit on November 27th seeking to stop the company's $7.5 billion deal which would effectively turn 41,000 defined benefit pensions into annuity contracts with Prudential insurance company. The lawsuit was filed in the United States District Court, Northern District of Texas, Dallas Division, by retirees in collaboration with the Association of BellTel Retirees Inc. The lawsuit requests an immediate temporary restraining order to be followed by a hearing to consider a preliminary injunction.

The Verizon retiree plaintiffs charge that Verizon's plan to transfer the retirees' pensions from the Verizon Management Pension Plan into Prudential insurance annuities violates the federal Employee Retirement Income Security Act (ERISA). One point of contention is that ERISA does not permit Verizon to carve out 41,000 pre-January 1, 2010 plan participants from over 100,000 participants.

Verizon's pension spinoff, expected to close in December, follows similar "de-risking" actions by Ford, General Motors and other companies. What "de-risking" really means is that employers with defined benefit pension plans are avoiding the risks of properly funding their pension trust funds by purchasing third-party annuities and placing future risks on retirees. However, under ERISA it appears that the only “out” for a plan sponsor is a standard or distress termination – and the statute contains detailed rules governing each of those options for offloading pension liabilities, including PBGC review. Thus, ERISA appears not to permit a plan sponsor to simply “sell off” assets and liabilities to a third party with no employment relationship to the participants or retirees or to avoid a PBGC review. The fact that Prudential happens to be an insurance company should be irrelevant.

The NRLN believes that the Verizon management retirees are justified in their effort to contest the company's conversion to an annuity that would eliminate the safety net provided by the Pension Benefit Guaranty Corporation (PBGC) and asserts that Verizon should not be allowed to self-interpret ERISA protections in an attempt to avoid its fiduciary plan funding obligations. Verizon’s announced transfer of pension obligations to Prudential strips retirees of all their protections under ERISA, including PBGC guarantees, leaving only the insufficient and varying coverage of $100,000 to $500,000 lifetime per person cap provided under state annuity guaranty associations.

The NRLN has become increasingly concerned over the trend toward “de-risking” and the stripping of retiree ERISA and PBGC protections. This Verizon action not only strips retirees of their ERISA and PBGC protections, it pushes the de-risking issue one step beyond reason. We continue to lobby Congress to pass our retiree Income Security proposals that include:

Protect pension plans through enactment of stronger ERISA laws
Protect pension plan assets from misuse by U.S. and foreign corporations
Protect pension plans from corporate mergers and acquisitions, including
foreign control
Protect pension benefits from terminations due to bankruptcy and PBGC
takeover
Protect Social Security's earned and paid-for benefits

The NRLN will be sending letters to Congressional leaders, the Department of Labor and the PBGC requesting that they oppose Verizon's "de-risking" plan and will be asking all NRLN members to support Verizon retirees by sending Capwiz messages to Congress. While Prudential is currently a sound insurance company, we have witnessed in recent years the demise or taxpayer bailout of too many firms that were once considered to be financial powerhouses.
Bill Kadereit, President
National Retiree Legislative Network
Reply

gk
Joined: 14 Jun 2008, 14:54

16 May 2014, 18:57 #2

RECENT ANNOUNCEMENT BY ALU

This is our wake up !

On Friday May 9, 2014 the Chief Financial Officer of Alcatel-Lucent made the following announcement during the 1st quarter earnings presentation:

“Announcement of intent to make a onetime offer to approximately 45,000 of our US retirees and former employees and related beneficiaries in our US Management Pension Plan, to convert monthly pension benefit payments into a single, lump-sum payment settling all outstanding pension liabilities relating to such offeree. Offer expected to be made in 2015 and to be exclusively funded out of US pension plan assets.”
The above announcement is all of the information that the LRO has at this time, but we can provide some related information:

1.In the Annual Funding Notice (AFN) you recently received (discussion on our website) our Management Pension Plan is funded at about 108%.
2.In the same AFN they reported about 100,000 people in our plan at 1/1/2013. Therefore, the number of 45,000 does not include all of the plan participants. We do not, at this time, have any information about how the selection for the offer will be made.
3.It is our understanding that if an individual is already retired and receiving a pension that it is voluntary as whether you continue to receive your monthly pension or take a lump-sum. We believe that is covered by ERISA.
4. At this time we also do not know how they will handle survivor benefits or supplemental pensions in the lump-sum calculation.
5. We would also want to know what impact this may have on our healthcare benefits and our group life insurance.
6. A lump-sum payment transfers two risks from the company to the retiree, life expectancy and earnings on the lump-sum. The lump-sum is calculated based on published life expectancy and those who live longer could use up their pension assets. A person taking the lump-sum would need to earn as much on the lump-sum assets as the percentage used to discount the lump-sum.
From the above we caution all of our members to be patient until we know more. Since the offer is not being made to all of our plan participants, it is possible you may not be affected. The LRO Officers will ask for a meeting with the ALU Human Resource people once the formal announcement is made. It is possible that ALU may have a number of meetings to provide additional information and the LRO could have a number of retiree meetings on this matter.
Reply