Over thirty years ago, I started the Pension Rights Center which concerned itself with such issues as shortening the time of corporate pensions vesting or improving their portability for job-changing employees. No one nightmared that companies would dramatically cut their contributions to these defined benefit plans during years of economic growth and record company profits. That is not the least of a trail of broken promises by these vastly overpaid corporate executives (with their gigantic special pensions) to their loyal workers.
Recently, employees from some major corporations highlighted some of the tricky ways these bosses are betraying the people who made their companies perform and profit. Under the name of the “Ad Hoc Coalition to Restore Retirement Security,” five broken promises were described.
First, companies broke promises to older employees by unfairly changing plan rules. AT&T, for example, was one of several large firms, to switch to a “cash balance” pension plan costing long-service salaried employees as much as half of their expected pensions. The employees want a federal law change to give them a “choice at retirement between receiving their promised pensions and those offered under any new rules.”
Second, Dresser-Rand was a division of Halliburton until the parent company sold it. Seemed pretty routine. Later, the Dresser employees learned that a loophole in the law allowed Halliburton to shift the pension funds into a plan for its own employees. This maneuver left the spun-off employees without their full early retirement pensions. They want to end the loophole where pensions can be devastated merely by selling a subsidiary to another owner.
Third, companies break pension promises to older employees by reclassifying them as independent contractors. Allstate did this to their insurance agents, who were on staff. The agents fought back, filing a law suit claiming that Allstate unlawfully deprived them of much of their pensions.
Fourth, GM resorted to the “fine print” to cutback or even cancel lifetime health insurance for its retirees if they accepted early retirement packages. Changing the rules after people have retired should be prohibited, say these workers.
Fifth, MCI/WorldCom employees trusted their executives when told that the company stock was a sound investment for their 401(k) plans. Actually, these executives knew the company was inflating its books while these bosses were selling their own company stock at the same time. Once again, gaps in the law need to be filled to allow for full remedies against such self-enriching deception at the top.
Obviously, these are devastating times for millions of workers who retired believing and found out that their company leaders were lying. One wonders why Congress is taking so long to amending the federal pension laws to prevent such sabotage of loyal workers. But then, the bosses are more likely to get their calls returned by many members of Congress than these employees.
But these veteran employees have organized. They need to expand their organizations to other companies where workers face similar trapdoors. For further information, go to www.pensions-r-us.org.