July 2010

SBC/ AT&T Telephone Concession Case

This is the situation as of July 1, 2010. The judge who heard and decided Phase l in favor of the employee/retirees passed away and the case has been transferred to a new judge.

Once that happened, AT&T asked the new judge to reconsider and reverse the prior judge’s findings. Attorneys for the plaintiff, of course opposed that request. In April, the Court stayed all proceedings in the Case, including the trial that was set for June 2010. Except for a ruling on AT&T’s request for reconsideration Phase ll of the Case is almost complete. If and when the judge denies AT&T’s motion the Case would be ready for trial shortly after that time.

This is a report on the status of a second Case filed against AT&T Affecting Certain PacBell/ Nevada Bell/Pacific Telesis Salaried Employees.

This lawsuit, entitled Barnes v. AT&T Pension Benefit Plan-NonBargained Program, No. 08-04058 MHP (N>D>Ca), alleges that the pension benefits of certain participants of the Pacific Telesis Group Cash Balance Plan for Salaried Employees (The” PTG Pension Plan” of “Plan”) who were entitled to an Alternative Transition Benefit (“ATB”) may have been miscalculated if they initially took a lump sum distribution and then subsequently bridged service after returning to work for Pacific Telesis (or a subsidiary or affiliate).

Beginning in 1996 as part of a corporate downsizing Pacific Bell (“Pac Bell”) and other affiliated companies began offering an ATB to terminating employees. Under the PTG Pension Plan if an employee terminated employment at less than 55 years of age with 20 years of service, the ATB benefit was subject to a discount to reflect the age and service of the participant at the time of his or her termination. However, if an employee who retired after March 31 ,1996, was subsequently rehired before October 31, 1997, and then worked 5 additional years, the employee “bridged” his or her service and was entitled to a “redetermined” ATB calculated on the basis of the employee’s age and service at the time of his or her n ext termination.

Plaintiff Barnes alleges that the administrator of the PTG Pension Plan only provided the “redetermined” ATB benefit to those rehired employees who elected to receive an annuity, and did not provide the benefit to rehired employees who , like himself elected to take a cash out at the first termination, despite language in the Plan which required that the “redeterminined” benefit be paid to all rehired employees who bridged their service, without regard to whether they elected to take cash out or an annuity at their prior termination.

This lawsuit is brought on behalf of the following persons;

Participants of the PTG (Pacific Telesis Group) Pension Plan, who meet the following requirements:

• Who terminated their employment with a company that participated in the PTG Pension Plan after March 21, 1996,

• Who were eligible for an ATB, which because they had not attained the requisite age of years of credited service subject to an ATB Discount,

• Who were subsequently rehired by a company that participate in the PTG Pension Plan on or before October 31, 1997, and worked at least five additional years; and

• Who, either (i) at their next termination, did not have their ATB adjusted to reflect their age and term of employment at their next termination of employment or (ii) are still employed at a Participating Company.

• Beneficiaries of any of the persons described in Group 1.

Additional information can be obtained from:

Cohen, Milstein, Sellers & Toll PLLC
1100 New York Avenue, N.W. Suite 500
Washington D.C. 20005

Their telephone number is 202-4098-4600 and
e-mail is jkolcun@cohenmilstein.com.

On April 2, 2010 the Court granted the Plaintiff’s request to amend the complaint and to assert allegations on behalf of a class of other similarly situated persons whose ATB may have been similarly miscalculated. On April 6, 2010 the amended complaint was filled. At this time we are waiting for the Court’s decision.

If you think that you are a member of this class you should contact the attorneys of record and request a questionnaire.

May 2010

VERY URGENT NRLN Action Alert

Tell Lawmakers To Help Secure Your Pension

MY PREVIOUS MESSAGE TO YOU ASKED THAT YOU SEND A CAPWIZ MESSSAGE TO YOUR HOUSE OF REPRESENTATIVES MEMBER WHO CAN HELP SECURE YOUR PENSION. SO FAR, MANY OF YOU HAVE BEEN CONTENT TO "LET SOMEBODY ELSE DO IT". PLEASE HELP BY TAKING ACTION ON BEHALF OF YOURSELF AND ALL OTHER RETIREES. IF YOU DON'T, IT IS POSSIBLE THAT YOU MAY REGRET IT SOMEDAY.

THE CURRENT STOCK MARKET MELT DOWN COMBINED WITH THE UNETHICAL TAKING OF ASSETS FROM YOUR PENSION PLAN MAY BE PLACING YOUR FUTURE AT RISK AND YOU WILL NOT KNOW IT FOR MONTHS. LET'S STOP COMPANIES LIKE GM, CHRYSLER, ALCATEL-LUCENT, QWEST, AT&T, DETROIT EDISON AND OTHERS FROM STEALING OUR PENSION SECURITY BY DEMANDING THAT H.R. 4213 INCLUDES LANGUAGE THAT WILL PROTECT OUR PENSIONS.

Click Here to access the NRLN Action Alert labeled ACT NOW TO PROTECT PENSIONS. Click the "Take Action" button, type in your zip code and click "GO" to identify your Representative. Click the "Elected Officials" tab and write down his or her phone number! Now personalize the letter with your own comments if you want to. If you have a problem accessing the Action Alert with the above link, go to www.nrln.org and click on the "Take Action Now" at the top of the NRLN website's home page.

SEND YOUR MESSAGE (SEE SAMPLE BELOW) NOW...... ALSO CALL HIM OR HER OR TELL ANYBODY THAT ANSWERS, THAT YOU SENT A MESSAGE AND THAT YOU EXPECT ACTION NOT POLITICAL BS...SAY IT LIKE YOU MEAN IT......MAKE THAT CALL!!!

You can also find your Representative's phone number in the Congressional Directory on the NRLN website Click Here.

Nike says it best --- JUST DO IT!
Chuck Gilbert

Click Here for a Sample Letter to send to your Representative.
PDF Format

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April 22, 2010

The Honorable Sander Levin, Acting Chairman
Ways & Means Committee
United States House of Representatives
1236 Longworth House Office Building
Washington, DC 20515-2212

Dear Chairman Levin:

As the President of our respective retiree organizations, we are writing to urge you to include in H.R. 4213, the House Ways and Means pension funding relief bill, language that will protect assets in defined benefit pension plans. The National Retiree Legislative Network has provided proposed language to your Ways and Means staff. As representatives of thousands of your retired Michigan constituents, we believe that companies who take pension funding relief must be prevented from using pension assets for non-pension expenses, such as lump sum severance payments. Since H.R. 4213 is very focused on asset preservation and the long-term funding security of defined pension plans, adding our proposal is a very integral part of what H.R. 4213 seeks to accomplish.
Actions known as “back door reversions” by companies represent a growing practice to circumvent the Congressional intent against reverting pension assets for corporate purposes. In 2009, the Pension Benefits Guaranty Corp. (PBGC) was very concerned that General Motors used $2.9 billion in pension assets to make lump sum severance payments during 2008. The GM pension plan ended that year with a deficit of $20 billion based on the PBGC's calculations. The Treasury Department's bailout loan program to GM included restrictions on GM's ability to continue to use pension assets for non-pension purposes.

On April 12, 2010, the Government Accountability Office reported that GM will need to add $12.3 billion to its pension fund by 2014 and Chrysler will need to add $2.62 billion. If those figures aren’t met, the government will need to step in and pay for the pensions of the 956,000 pensioned employees for which Chrysler and GM are responsible. Surely Congress does not want to offer funding relief to GM and Chrysler yet leave the door open for them to simultaneously remove assets, as GM did in 2008, during the funding relief period?

Delphi's use of the "back door reversions" practice, similar to GM's, contributed significantly to its pension plan being severely underfunded and resulted in the takeover by the PBGC. The use of pension plan assets to pay corporate restructuring costs is not limited to the auto industry. Research by the National Retiree Legislative Network has found that AT&T, Delta Air Lines, Federal Express, Lucent, Qwest and Verizon are among the other companies who have used “back door reversions” to circumvent Congressional intent against reverting pension assets for corporate purposes. Plan participants later suffered benefit reductions as a result.

It simply doesn’t make sense for Congress to authorize a funding hiatus without simultaneously closing this "back door." These "back door reversions" practices place pension plans at risk to be terminated. These actions threaten the security of pension plans and the potential is great that the PBGC might have to take over the plan in the future.

The NRLN's pension asset protection proposal presents a very narrowly-focused synergy of corporate financial relief and pension asset security without any cost to corporations or taxpayers. Please don't miss the opportunity on pension funding relief legislation to enhance the financial security of America's retirees by including pension asset protection.

Sincerely,

Chuck Austin, President

John Christie, President
National Chrysler Retirement Organization General Motors Retirees Association

As the result of a number of NRLN letters sent to the White House, President Obama's staff charged with crafting and managing health care reform policy for the Administration invited the NRLN Washington, DC team to a one-on-one meeting.  Marta Bascom, NRLN Executive Director, and Michael Calabrese, NRLN Legislative Strategist, met on Thursday, Feb. 17th, with key staff members to reiterate the NRLN's primary health care legislative priorities.  The NRLN staff placed emphasis on the reimportation of safe, lower cost prescription drugs; the NRLN's Maintenance of Cost Payment proposal to protect retirement benefits as currently embodied in the House health care reform bill, and Medicare buy-in for retirees ages 55-64 at a cost that will not burden Medicare, plus other issues important to retirees. 

The White House staff restated President Obama's commitment to comprehensive health care reform and reviving the conference on the bills that have been passed by the House and Senate.  The NRLN urged the White House to support the NRLN's efforts on Capitol Hill to get these proposals passed independently should they not pass in a comprehensive national health care bill.  Many of the issues of great importance to retirees are not included in the final, pared-down bills on the Hill and need to be addressed immediately.

The fact that the White House invited the NRLN's staff to a meeting demonstrates that our messages are gaining the attention of government leaders.  The emails and phone calls to Washington, DC from our Grassroots Network members are an important part of making the voices of retirees heard.  Together, our efforts will make a positive contribution to retirement security.

Finally, I want to share with you below the text of a letter that I sent to Senator Harry Reid, Majority Leader, with a copy to House Speaker Nancy Pelosi, on the subject of pension asset protection.  A similar personalized letter was sent to six other leaders in the Senate.  We are closely tracking the pension funding relief issue in Congress and may need to call on our Grassroots Network members to send letters and make phone calls to their elected representatives.

Bill Kadereit

President, National Retiree Legislative Network

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February 14, 2010

United States Senate

522 Hart Senate Office Building
Washington, DC 20510-2803

 

Dear Senator Reid:

It is understandable that a number of Senators would be sympathetic to the appeals from numerous companies for temporary relief from pension plan funding requirements due to the steep market slide in 2008.  The National Retiree Legislative Network (NRLN), which represents the interests of more than 2 million retirees who have retired from 114 companies and public entities, recognizes the plight of these companies.  We would not want to force contributions to pension plans that would cause irreparable harm to the companies, trigger layoffs or result in companies declaring bankruptcy.

However, pension plan assets currently held in trust should not be allowed to be used by these same companies to pay for operating expenses.  ERISA should be amended to stop companies from using pension assets to make severance payments during a corporate restructuring.  These "back door reversions" represent a widespread practice by companies to circumvent the Congressional policy against reverting pension assets for corporate purposes. It simply doesn't make sense for Congress to authorize a funding hiatus without simultaneously closing this back door.

To better protect the pensions of retirees and future retirees, I urge you to include in the Senate's pension funding relief bill language similar to the provisions that are in Section 111 (pages 65 and 66) of H.R. 3936, the Preserve Benefits and Jobs Act of 2009, sponsored by Representatives Earl Pomeroy and Pat Tiberi.

 

The language in Section 111 relating to a company's ability to amend its pension plan, in part, states: "No ad hoc amendment to a defined benefit plan which is a single employer plan which has the effect of increasing liabilities of the plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate of which benefits become nonforfeitable may take effect during the plan year if the adjusted funding target attainment percentage for such plan year is- ''(I) less than 120 percent, or ''(II) would be less than 120 percent taking into account such amendment."

 

An increasing number of companies have tapped pension assets to pay for lump sum payments equal to six (6) months or even twelve (12) months pay to employees who agree to retire within a specific time window. In 2001 and 2002, a struggling Lucent Technologies charged $2.2 billion in lump sum "termination benefits" to its various employee pension plans.  More recently, GM used $2.9 billion in pension assets to make lump sum severance payments during 2008 - and ended the year with a $12.4 billion pension deficit ($20 billion by PBGC calculations).  AT&T, Bethlehem Steel, Chrysler, Consolidated Freightways, Delphi, Delta Air Lines, Federal Express, Polaroid, Qwest, United Airlines, Verizon and many other corporate plan sponsors have raided pension assets with impunity and used those assets to cover their business restructuring expenses.

 

These back door reversions are not offset by corresponding reductions to pension liabilities and are gone forever. This practice places pension plans at risk to be terminated. It is past time to end this pilfering of defined plan pension assets.  These actions threaten the security of pension plans and the potential is great that the Pension Benefits Guaranty Corp. (PBGC) might have to take over the plan in the future. Furthermore, depleted assets reduce the likelihood the plan will ever generate surplus assets that can be used to offset corporate health care costs for retirees or be available for pension Cost of Living Adjustments (COLAs), a benefit that non-government retirees seldom receive.

 

The NRLN has researched and written a whitepaper on how companies are misusing pension plan assets and provides our proposed amendments to the Pension Protection Act of 2006 to prevent the abuses. I have attached the Executive Summary from the whitepaper.  If you would like to receive a copy of the entire whitepaper, please contact Marta Bascom, the NRLN's Executive Director, on (703) 863-9611 or by email at marta.bascom@linkspace.net .

 

The Senate has an opportunity for a quid pro quo-companies receive temporary funding relief and retirees gain the protection of their pension assets from being used for non-pension expenses.  Please don't miss this opportunity to provide for the financial security of America's retirees. NRLN members who are Nevada residents have retired from AT&T, Alcatel-Lucent, Chrysler, Delta Air Lines, General Motors, Qwest and NRLN individual members retired from many other companies will appreciate your support on this matter.

 

Sincerely,

  Signed

Bill Kadereit

President, National Retiree Legislative Network

 

Attachment

 

Copy to: Representative Nancy Pelosi, Speaker

                U.S. House of Representatives

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The use of pension assets to make severance payments during a corporate restructuring is the largest and most widespread "back door reversion" by which some companies are seeking to circumvent the Congressional policy against reverting pension assets for corporate purposes.  When pension funds were used to finance hostile takeovers and the mass layoffs that typically followed, in 1990 Congress stopped the practice by imposing a 50 percent excise tax on pension reversions.  But today's "back door reversions" are more insidious.  Although ERISA explicitly prohibits the use of qualified pension assets for "layoff benefits," companies can amend a plan at any time not merely to offer older workers enhanced early retirement benefits (by awarding extra years of service credit), but even to offer lump sum severance payments equal to a year's salary or more as part of a corporate restructuring. 

 

The 2006 Pension Protection Act tightened up on this practice somewhat by requiring plan sponsors to pre-fund a plan amendment that increases benefit liabilities to the extent the plan's funding level would fall below 80 percent (after taking account of the new benefit liability).  However, as the 2008 stock market meltdown demonstrated, a plan that is only 80 percent funded during a bull market could easily end up below 60 percent funded in a bear market - and in default with the PBGC if the plan sponsor declares bankruptcy.  Moreover, any significant reduction below full funding not only leaves all plan participants insecure, it also reduces the ability of the plan to build a surplus that could be used to grant cost-of-living adjustments to longtime retirees, whose fixed monthly benefits erode with inflation, or to offset the cost of retiree health benefits through a Section 420 transfer.

 

The trend toward distressed companies using employee pension assets to pay severance costs - instead of relying on a restructuring reserve or other corporate assets - is not new to the current financial crisis.  Lucent, United Airlines, AT&T, Verizon, Qwest, Federal Express, Delta and Delphi are among the other companies that have tapped pension assets to pay corporate restructuring costs. Some of these companies drained pension assets for severance payments as they spiraled downhill toward bankruptcy and an eventual taxpayer bailout courtesy of the PBGC.  Other companies, left under-funded, cut other retiree benefits across the board.  And some others, although their plans remained solvent, used up "surplus" assets that could have benefitted the vast majority of plan participants if used instead for cost-of-living adjustments or offset the cost of retiree health care benefits.  In the current crisis, General Motors used pension assets to pay for billions in severance payments during 2008 - and ended up with such a dangerous degree of under-funding that in early 2009 the Treasury Department restricted the practice as a condition of the federal bailout loan package.

 

The most effective way for Congress to protect plan participants (and taxpayers) from unfunded liabilities from severance, layoff or any other benefit increase is simply to increase the target funding level threshold required for unfunded benefit increases and lump sum payouts from the 80 percent level, currently required under the PPA, to 120 percent. Severance or other benefit increases to selected individuals that are not funded should be paid out of the company's operating expenses, not from the pension trust.  This would not limit the ability of plan sponsors to enhance benefits. What it does do is require companies to currently fund lump sum payouts or other benefit increases that would otherwise cause the plan to become under-funded or worsen its level of under-funding. Amendments increasing benefits that are collectively bargained or negotiated between a plan sponsor and bona fide union representatives, or in the context of a jointly-trusteed Taft-Hartley plan, should be exempted from this more restrictive funding level. 

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EMPLOYEES’ PENSIONS,
DISABILITY BENEFITS AND DEATH BENEFITS.

REVISED AMMENDENTS-EFFECTIVE JUNE 1, 1969

ANY EMPLOYEE WHOSE TERM OF EMPLOYMENT HAS BEEN 30 YEARS OR MORE AND WHO HAS REACHED THE AGE OF FIFTY-FIVE AND WHOSE TERM OF EMPLOYMENT HAS BEEN 25-OR MORE YEARS, OR ANY FEMALE EMPLOYEE WHO HAS REACHED THE AGE OF FIFTY YEARS MAY, IF THE CASE IS APPROVED FOR SUCH TREATMENT, BE RETIRED FROM ACTIVE SERVICE AND, UPON SUCH RETIREMENT SHALL BE GRANTED A SERVICE PENSION.

ANY EMPLOYEE WHO HAS REACHED THE AGE OF FORTY YEARS AND WHOSE TERM OF EMPLOYMENT HAS BEEN 15 OR MORE YEARS AND WHO, ON OR AFTER JUNE 1, 1969, LEAVES THE SERVICE OF THE COMPANY FOR ANY REASON, SHALL BE ELIGIBLE TO A DEFERRED SERVICE PENSION COMMENCING WITH THE MONTH IN WHICH HE/SHE ATTAINS AGE SIXTY-FIVE.

DEFERRED VESTED PENSION

ELIGIBILITY: TERMINATION OF EMPLOYMENT AFTER COMPLETING AT LEAST 5 YEARS OF VESTING SERVICE, AND BEFORE REACHING ELIGIBILITY FOR SERVICE PENSION.

BENEFIT: THE MONTHLY BENEFIT PAYABLE AS A STRAIGHT LIFE ANNUITY STARTING ON THE PARTICIPANT’S NORMAL RETIREMENT AGE (THE LATTER OF AGE 65 OR THE FIFTH ANNIVERSARY OF PLAN PARTICIPATION, EQUALS THE PARTICIPANT’S ACCRUED BENEFIT ON THE DATE OF TERMINATION. THE BENEFIT IS ACTUARIALLY REDUCED IF COMMENCED PRIOR TO NORMAL RETIREMENT AGE.

DATE PAYMENTS BEGIN: A PARTICIPANT WHO TERMINATES EMPLOYMENT WITH 5 OR MORE YEARS OF VESTING SERVICE RECEIVES A DEFERRED VESTED PENSION COMMENCING AT NORMAL RETIREMENT AGE OR AT TERMINATION OF SERVICE, IF LATER. IF THE PARTICIPANT HAS SUFFICIENT SERVICE FOR EARLY RETIREMENT ELIGIBILITY, THE DEFERRED VESTED PENSION MAY COMMENCE EARLY WHEN THE PARTICIPANT LATER MEETS THE AGE REQUIREMENTS.

SURVIVING SPOUSE’S BENEFIT

BENEFIT: THE ELIGIBLE SPOUSE OF AN ACTIVE PARTICIPANT WHO DIES PRIOR TO NORMAL RETIREMENT AGE AND BEFORE BENEFIT PAYMENTS COMMENCE IS
ENTITLED TO ONE OF THE FOLLOWING BENEFITS:
IF THE PARTICIPANT DIES WITH FIVE OR MORE YEARS OF VESTING SERVI CE, HAS LESS THAN 15 YEARS OF PENSION ELIGIBILITY SERVICE, AND IS NOT ELIGIBLE FOR A SERVICE PENSION, THE ELIGIBLE SPOUSE RECEIVES A DEFERRED MONTHLY SURVIVOR BENEFIT FOR LIFE BEGINNING ON THE DATE THE PARTICIPANT WOULD HAVE REACHED EARLIEST ELIGIBLILITY TO COMMENCE A DEFERRED VESTED PENSION.

IF THE PARTICIPANT DIES ELIGIBLE FOR A SERVICE PENSION OR WITH 15 YEARS OF PENSION ELIGIBILITY SERVICE, A SURVIVING SPOUSE RECEIVES A MONTHLY SURVIVOR PENSION PAYABLE FOR LIFE EQUAL TO 45% OF THE ACCRUED BENEFIT.

WHO TO CONTACT FOR BENEFITS

FIDELITY SERVICE CENTER
P.O. BOX 770003
CINCINNATI, OH 45277-0065
TELEPHONE: 1-800-416-2363

INFORMATION REQUIRED
YOUR FULL NAME AND SOCIAL SECURITY NUMBER (SINGLE/MARRIED NAMES)
LENGTH OF SERVICE (START DATE/TERMINATION)
JOB TITLES (MANAGEMENT/NON-MANAGEMENT)
IF YOUR SPOUSE WAS THE EMPLOYEE, HIS/HER NAME AND JOB TITLE.