July 6, 2005
Recently a great deal has been written in the press about Defined Benefit
Pension Plans and proposed legislation in Congress to better protect
retirees’ pensions. Some
basic points are presented below with regard to these often-complex issues.
pension plans are Defined Benefit Plans.
Plans for many companies are, or have been, underfunded
for various reasons,
including unrealistic accounting
Such results have
highlighted by the press as a
result of related troubles in the airline industry.
Plans are backed to some extent
by the federal agency known as the Pension Benefit Guaranty Corporation (PBGC).
Many Defined Benefit Plan obligations have been off
loaded to the PBGC. Within their
industries, competitive pressures may
induce other companies to attempt to off load their
pension obligations onto the PBGC
long-term liabilities exceed what it is currently able to pay.
Thus, workers and
retirees may be at
risk of being left with reduced
The LRO has
been unable to verify Lucent’s assertion that the management pension plan
is properly funded, despite our best efforts to gain full funding
disclosure. An effort is being made to schedule another meeting with
Lucent executives to
discuss pension funding, health care, prescription drug
benefits and the life insurance trust.
“modernization” of federal pension laws is now underway in the U.S. House
of Representatives with the recent introduction of the Pension Protection
Act of 2005 (HR 2830). Bill Kadereit, the LRO Public Affairs Director who
also serves as the Vice President – Legislative Affairs for the National
Retire Legislative Network (NRLN), is deeply involved
with efforts to strengthen pension protection laws. He and members of the
NRLN lobbying staff recently met in Washington, D.C. with the staff for
the House Committee on Education and the Work Force prior to the
introduction of HR 2830. It appears there are some good features in the
bill to make pension plans more secure. Bill is interfacing with the
NRLN’s legal advisors who are analyzing the proposed legislation. They
will identify any areas of concern and recommend changes that will
strengthen the bill for retirees. The focus is on more open disclosure of
pension plan information; pension funding reforms, and
objecting to forms of
Cash Balance Plans that disadvantage older workers.
recognize these are unsettling times.
you that the LRO Board and other volunteers are doing a great deal of work
in an effort to ensure the security of your pension plan and to prevent
further erosion of your benefits. Your support through the messages you
send and your dues that provide the financial foundation
for LRO efforts, are
Breslin, LRO President