Tuesday, April 20, 2010

Cash Balance Baloney

"AT&T Inc. is seeking to dismiss a long-running pension case alleging age discrimination that seeks $2.3 billion in damages, according to documents filed this week in a federal court. The suit alleges a 1998 pension change effectively froze the pensions of 40,000 older management employees at AT&T, in some cases for years, but not those of younger employees. ... "we believe the conversion to our cash balance plan was appropriate and in accordance with all legal obligations,' said spokesman Mark Siegel. 'We believe our filing speaks for itself in explaining why we have no additional liabilities to these retirees.' ... Legal papers filed Monday in federal court in Newark, NJ, include the first publicly disclosed estimate for potential damages. ... Last May, the [SEC] asked AT&T why it hadn't disclosed its potential exposure in the pension case. ... If a jury found that the company willfully discriminated against older workers, it could award punitive damages that would double the size of the claim to $4.6 billion. ... In its motion for dismissal, AT&T is asking the judge to throw out the case without a jury trial. ... Minutes of a 1997 meeting of AT&T's pension consultants, included in court documents, notes that 'employees in 40s could lose, [and] have to wait 10 years for benefits'," Ellen Schultz at the WSJ, 7 April 2010, link:

I wish the AT&T employees well. Having attended actuaries cash-balance plan conversion seminars, I assure you, the conversions are made to reduce current employees' pension obligations. See my 11 February 2008 post on Uncle Sam's position on cash-balance plan conversions: http://skepticaltexascpa.blogspot.com/2008/02/treasury-and-working-class.html.

1 comment:

Anonymous said...

I agree that there is a predatory approach to the extraction of the savings and retirement of Americans by Wall Street.

And they have clearly captured the Administration, Congress and regulators.

I guess it's a road we'll keep travelling down for a while...