Telco Inc

The NRLN has been actively pursuing the issue of the U.S. Government's Pension Benefit Guarantee Corporation. The New York Times recently reported that possible pension defaults by major airlines could lead to a national pension scandal comparable to the Savings and Loan debacle of the 1980's and necessitate a multi-billion dollar taxpayer bailout.

It has been less than four months since Congress passed and the President signed legislation that gave companies (like SBC) a temporary pension fund relief through a more liberal formula that saves employers billions of dollars in payments to the Pension Benefit Guarantee Corporation.

(The Pacific Telesis Group Pension Plan had in excess of 10 billion dollars in our pension trust fund when it was merged into the SBC Corporation.) Following the stock market debacle, a reduction in annual payments to the pension trust fund by SBC and a one-time transfer of $300 million from the pension trust to "health benefits," our Pacific Bell Pension Trust Fund was reported at $4,006,126,000.00 as of December 31, 2002. This compared to $6,131,355,000.00 as of January 1, 2002.
(A decrease in net assets of $2,125,229,000.00.)

The NRLN is proposing tighter funding rules for companies whose pension plans are not financially secure, higher premiums for companies at risk of failing to meet their pension obligations and companies should not be allowed to "take" pension trust "surplus" funds as though it belonged to the company and its shareholders. The NRLN Newsletter page can be found by clicking the link below.

If you should have a problem accessing the newsletter via this link, go to the NRLN website at www.nrln.org and click on the link at the top of the home page with the heading that states:
FOCUS NEWSLETTERS.

In this 4-page Fall 2008 Issue of FOCUS, NRLN President Bill Kadereit writes in his column about two NRLN taskforces that are researching and writing white papers that will be the corner stones upon which to build proposals to key Congressional committees for retirement legislation. The NRLN's Pension Advisory Committee is preparing a white paper to show why legislation should be passed to restrict pension plan assets from being used as they are today, to pay for company restructuring expenses such as severance pay and layoff allowances. The other white paper is being developed to demonstrate the need to ensure that retirees will receive an employer-sponsored payment to purchase healthcare insurance should employers reduce or eliminate retiree healthcare plans.Marta Bascom, NRLN Executive Director, writes in her column about the importance of retirees learning how the candidates of president are going to address the challenges of healthcare and financial security for older Americans. The NRLN Retiree Association featured in this issue is the TelCo Retirees Association. There is also a profile on Charles "Chuck" Gilbert the TelCo Retirees Association's representative on the NRLN Board of Directors.You will need Adobe Reader software to be able to open the newsletter.

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An extraordinary team effort has caused the Senate Finance Committee staff to withdraw consideration of a proposal to modify Section 420 of the IRS Code to allow the transfer of billions of dollars from traditional defined benefit pension plans to fund 401(h) healthcare accounts to pay the healthcare benefits of active employees.

Because the National Retiree Legislative Network's Washington , D.C. staff members Phyllis Borzi, Marta Bascom and Michael Calabrese learned that the Senate Finance Committee was giving serious consideration to the proposal, we were able to insert ourselves early on into the dialogue to provide a voice for retirees. Early this month, Marta, Michael and I prepared a "white paper" opposing the proposal under consideration and offering alternatives. The "white paper" served as a basis for a conference call with two Senate Finance Committee staff members.

Due to our concerns following the call that the staff might propose legislation to the 21 members of the Senate Finance Committee, the NRLN formed a coalition with the AFL-CIO and the Pension Rights Center to oppose the proposal under consideration. Next, the NRLN's Grassroots Advocates who live in the states that have a member on the Senate Finance Committee responded to our request to send emails to their Senators. Those letters from constituents got the attention of several Senators and the Finance Committee staff members.

On Wednesday, June 25, one of the Finance Committee staff members with whom we had communicated earlier this month requested a conference call with the NRLN. On the Thursday conference call with Marta, Michael and me, the staff member informed us that due to the high level of opposition to the proposal it would be withdrawn.

The withdrawn proposal, motivated by the opportunity to gain additional corporate tax revenues, would have had devastating consequences on the future pension security of 44 million present and future retirees. Heading off this potential legislation shows once gain how important it is for retirees to have a strong voice on Capitol Hill.

This is why we must continue to grow the NRLN's Grassroots Network, gain affiliation with additional Retiree Associations, and attract more Individual Members who will make an annual contribution to fund our legislative efforts. Association solicitation on behalf of the NRLN and encouraging family members and friends to sign up in the Grassroots Network at http://capwiz.com/abtr/mlm/signup/ and become an NRLN Individual Member are critical to our continuing success. Details are available at www.nrln.org

Thanks again to the NRLN's Washington staff members, the AFL-CIO, the Pension Rights Center and NRLN Grassroots Advocates for coming together to say with one strong voice that it would be a mistake for the Senate Finance Committee to support legislation allowing Section 420 transfers from defined benefit pension plans to be used to pay for healthcare benefits for active employees.

You have probably read or heard news reports that the U.S. Senate on Thursday night, August 3, passed the Pension Bill that was passed by the U.S. House on July 28. The Senators' vote was 93-5 and the Representatives voted 279-131. President George W. Bush is expected to sign the bill into law.

The passage of the Pension Bill by both houses of Congress represents a major accomplishment by the NRLN and our Grassroots Network members. You are to be commended for your determined effort to convince your Senators and Representatives of the urgent necessity to pass legislation tightening corporate pension funding rules and closing the loopholes that have enabled companies to accumulate huge pension liabilities. Over the past 19 months, NRLN Officers, Staff and Grassroots Network members called, met in person with and then sent 39,335 letters to elected representatives through the NRLN Capwiz website. Visits, emails, letters and countless phone calls to Capitol Hill offices and many face-to-face conversations with Senators and Representatives or members of their staffs paid off. Thank you!

In the legislative give-and-take process, I don't believe anyone ever gets everything they want in a bill. However, the NRLN certainly got a good number of its key issues included in the legislation that has passed.

First, the NRLN has always supported the basic thrust of the bill since it substantially tightens pension plan funding requirements, thereby greatly reducing the risk that plans will default to the Pension Benefit Guaranty Corporation (PBGC) in the future. Calculations of plan liabilities, asset values and the level at which plans must be funded have all become far safer for retirees. Most companies will have to fund 100 percent of their pension plan's liabilities, instead of the current 90 percent, within seven years. .

Second, the NRLN campaigned to reduce the negative affect that the five-year asset smoothing rule had on the timing and amount of funding a company had to add back to a plan after the assets plummeted due to a stock market crash. Instead of having to add plan assets to offset losses, companies, under the old law, were allowed a five-year smoothing period that shielded them from this obligation. As a result NRLN association members' plans reported overstated pension assets from 2000 - 2005. The new law reduces the smoothing period to a two-year period. This means companies will face having to add assets back after two years, instead of after five. A win for us!

Third, the business community-with the support of House Majority Leader Boehner-tried mightily but failed to retroactively legalize cash-balance conversions and the benefit "wearaway" it often inflicts on older workers. This would have negated lawsuits by retirees in several NRLN associations. The NRLN played a leading role in beating back any retroactive legalization -- and in preserving the Senate protections against "wearaway" for future cash balance conversions.

Fourth, corporate lobby groups attempted to greatly reduce the level at which a pension fund "surplus" can be transferred to offset corporate operating expenses for retiree health care benefits (Sec. 420 transfer). The NRLN had urged Senators and Representatives not to lower the transfer threshold of Section 420 of the Internal Revenue Code to the 115% in the original bill passed by the House in December 2005. While we would have preferred not to change the 125% that is in current law, we consider the final provision of 120% to be a victory for retirees. Since the calculation of pension liability is much more conservative under the new law, this may actually be a HIGHER threshold than under current law.

Fifth, pension plan disclosures to participants are improved, though not as much as we had hoped. For example, each year plans must affirmatively disclose their funding levels, and make extra disclosures if they are funded below 100%. These reports must be published in the form of statements to retirees within 120 days from the end of plan years. Today, we get nothing for 10 months, too late for taking action. Also, under the new law, detailed filings must be made available electronically. These new disclosure requirements in this law represent good progress and precedent we can build upon.

We applaud these provisions in the bill. Nonetheless, the bill also presents some troubling aspects. For example, the cash balance provisions are very broad and could present detrimental consequences to older workers as their plans are converted from defined benefit plans to cash balance plans. These so called "transition rules" could have been much improved and better defined.

The reason for the uncertainty about how the transition rules in the bill would affect older workers is that the conference took place behind closed doors, pushing aside many conferees that were entitled to be at the table. The process was subverted, and while the report carries with it some positive provisions, others could have been made much stronger.

Yet if it hadn't been for the pressure exerted by our Grassroots Network members, I'm convinced the legislation would have been much less favorable to workers and retirees-if there would have been a bill passed at all. I think this being an election year, the Senators and Representatives recognized the power of retirees at the ballot box and were afraid to go home on their August recess without passing a Pension Bill that provided some noteworthy protections for defined benefit pension plans.

Once President Bush signs the pension bill into law, the NRLN will redouble its focus and resources toward the passage of healthcare reforms, such as H.R. 1322 or similar legislation that will protect healthcare coverage for Americans, and at more reasonable costs. We will soon roll out a strong campaign supported by our membership and our dedicated Legislative Committee and very competent and dedicated Washington, D.C. staff. Most importantly, we will need your continued, strong grass roots support in communicating with your elected representatives. Let's keep it going strong!

On November 16, 2005 the U.S. Senate passed by a vote of 97-2 The Pensions Security and Transparency Act of 2005 (S.1783) and on December 15, 2005 the U.S. House of Representatives passed by a vote of 294-132 The Pension Preservation Act of 2005 (H.R.2830). Conferees have recently been named for the joint House and Senate conference committee on pension reform legislation. It is the job of these conferees to work out differences in the two bills and make other changes they deem appropriate before sending a revised bill to the House and Senate for final votes.

The National Retiree Legislative Network strongly believes there must be improvements made during the conference committee to strengthen protections for retirees’ pensions. The four critical areas where the NRLN is lobbying for improvements include the following:

A. Supports the prospective provision in the Senate bill eliminating "wearaway" for normal and early retirement and opposes any effort to retroactively legalize cash balance conversions.

B. Opposes lowering from 125% to 115% of the Section 420 threshold for transfers of money out of pension plans.

D. Require that investment advisors for 401K plans have no potential conflicts of interest.

Once the pension legislation passes it will impact retirees for years to come. Therefore, we must make every effort to gain the above itemized improvements the NRLN has identified as critical.

House Members from the Education and Workforce Committee: (Buck McKeon, California 25^th District) (Sam Johnson, Texas 3^rd District) (John Kline, Minnesota 2^nd District) (Patrick Tiberi, Ohio 12^th District) (John Boehner, Ohio 8th District) (George Miller, California 7^th District) (Donald Payne, New Jersey 10^th District) (Robert Andrews, New Jersey 1^st District)

House Members from the Ways and Means: Chairman Thomas, California 22^nd District) (Cave Camp, Michigan 4^th District) (Charles Rangel, New Your 15^th District)

U.S. Senators (Max Bacus, D-MT) (Jeff Bingaman, D. NM) (Kent Conrad, D. ND) (Mike De Wine, R. OH) (Michael Enzi, R. WY) (Charles Grasssley, R. IA) (Judd Gregg, R. NH) (Tom Harkin, D. IA) (Orrin Hatch, R. UT) (Johnny Isakson, R>. GA) (Edward Kennedy, D. MA) (Trent Lott, R. MS) (Barbara Mikulski, D. MD) (John Rockefeller, D. WV) (Rick Santorum, R. PA) (Olympia Snowe, R. ME)

WRITE, CALL OR EMAIL THESE CONGRESSMEN AND SENATORS (WHETHER OR NOT YOU ARE LIVING WITHIN THEIR SENATE OR CONGRESSIONAL AREAS OF RESPONSIBILITY) AND INFORM THEM THEY MUST SUPPORT "ALL WORKER PROTECTIONS" IN THE PENSION BILLS, AND SUPPORT THE "PROTECTIVE PROVISIONS ON CASH BALANCE PLANS" THAT ARE INCLUDED IN S.R.1783 AND INSIST THEY ENSURE THESE PROVISIONS ARE PRESERVED.

INFORM THEM THE CASH BALANCE PROVISIONS INCLUDED IN S.R.1783 MUST INCLUDE TRANSITION PROTECTIONS THAT HELP MAKE UP LOSSES OLDER EMPLOYEES FACE IN CASH BALANCE CONVERSIONS, TO ELIMINATE THE EGREGIOUS PRACTICE OF "WEARAWAY," (WHERE COMPANIES FREEZE BENEFITS FOR OLDER EMPLOYEES) AND TELL THE CONFEREES ANY LEGISLATION LEGALIZING THE PRACTICE OF "WEARAWAY" MUST DO SO PROSPECTIVELY, NOT RETROACTIVELY AND THE LEGISLATION MUST INCLUDE SUCH PROTECTIONS.

(Here are some thoughts for your communications: "One of the most unethical means some companies are using to renege on pension promises to their older workers is ‘cash balance’ pension plan conversions. While companies allow older workers the option of staying in their traditional pension plans, other unethical companies have ‘lowballed’ new cash balance plan benefits available to older workers under their ‘new plans‘, then frozen traditional defined benefit plans where older workers cannot accrue additional net pension benefits, no matter how long they work."}

(Retirement plans that are under-funded need to be fixed by requiring companies to increase contributions to their pension plans.)

(Strengthen pension plan termination rules so that excess funds have to be used for the sole benefit of pension plan participants and cannot be returned to the company or corporate executives.)

(Early retirement subsidies, once vested and collected, must be fully protected.)

PLEASE GO TO THE NRLN WEBSITE AT http://capwiz.com/abtr/home AND SEND LETTERS TO CONGRESS NOW. ON THE ACTION ALERT PAGE YOU WILL SEE THE FOLLOWING HEADLINE:

"MAKE IMPROVEMENTS TO PENSION REFORM LEGISLATION. AFTER YOU CLICK ON THE ‘CLICK HERE’ BELOW THE HEADLINE, YOU WILL BE REQUESTED TO TYPE IN YOUR ZIP CODE. YOUR ZIP CODE WILL IDENTIFY WHETHER ANY OF YOUR LEGISLATORS ARE CONFEREES. IF SO, YOU WILL BE PRESENTED A ‘TARGETED’ LETTER FOR CONFEREES. A ‘GENERAL LETTER’ WILL ALSO BE AVAILABLE FOR ALL OTHER MEMBERS OF THE HOUSE AND SENATE."

A recently completed federal study found that one in ten pension plans were hard frozen by corporations in 2003! Major companies freezing pensions include Sears Roebuck and Co., Motorola, Inc., IBM and Verizon!

A study by the consulting firm Watson Wyatt World Wide found that 71 of the nation’s 1000 largest companies either froze or terminated their pension plans! (Up from 45 in 2003!)

While Pacific Bell/Nevada Bell retirees have not at this date been radically impacted by Cash Balance Plan Benefits, other former Bell System retirees have and the obvious trends are becoming evident daily in corporate America. The time to implement these proposed "safeguards to promised retirement benefits is now!!"

We ask all members to ;become a "United Bell System" force to ensure passage of this critical pension security legislation! Thousands of our fellow company pensioners need your support.