In a move to block the US Treasury Department of supporting IBM in the Kathi Cooper case, Congressman Bernie Sanders' amendment has been passed by the House of Reps.
Attached is a copy of a letter which appeared in the Burlington Free Press and was submitted by J.M.Leas, which will explain more
On July 31, 2003, a Federal District Court in Illinois decided that the cash balance pension plan IBM adopted in 1999 violated federal retirement law because it discriminated on the basis of age. The court also declared that pension changes IBM installed in 1995 violated that same age discrimination statue.
The Wall Street Journal reported on August 1, 2003 that "potentially, IBM could have to recalculate benefits for 130,000 employees and retirees,paying most of them more."
The changes IBM implemented in 1999 created an unprecedented
groundswell of dissent and organizing among IBM employees including a Congressional Town Meeting hosted by Congressman Bernie Sanders that was attended by more than 700 IBMers. Covered by national media, this Town Meeting led to a Senate hearing chaired by Senator James Jeffords, stockholder resolutions, and the class action law suit.
Employees expressed outrage that IBM broke its promise that
retirement pay and retirement medical insurance were a secure part of earned compensation. The protest campaign was so massive that IBM partially backed down, allowing about 35,000 additional employees to choose between the pension plans.
The court confirmed employee calculations and reports in the Wall Street Journal, saying that the cash balance plan would "cause reductions in retirement pay of up to 47% for older workers."
Now, we have a federal district court of the United States of America that has carefully considered the fully developed arguments on both sides. In its written decision the court declared that IBM's "1999 cash balance formula violates the literal terms of the Employee Retirement Income Security Act. IBM's own age discrimination analysis illustrates the problem."
From IBM's own documents the court also concluded that "IBM
proceeded with the cash balance plan with open eyes and was fully informed of the consequences of the litigation that was sure to come." Thus, the court found that IBM knew it was violating the law when it announced the new plan in 1999.
IBM gave various pretexts at the time but the real reason IBM
implemented the cash balance plan has since become clear: to boost the report of profit under a pension fund accounting rule and to boost executive pay based on that "vapor profit" report.
IBM announced that it will appeal the court decision. Unfortunately, the Bush Administration is offering substantial help to IBM. First, the Treasury Department is expected to release new regulations that would allow the very cash balance pension plans that the federal court ruled illegal. Second, the Treasury Department may also file a brief in support of IBM's appeal.
Countering those plans, however, last week Congressman Sanders
offered an amendment to prevent the Treasury Department from
assisting IBM in overturning the federal district court ruling. The Sanders amendment passed by an overwhelming 258 to 160.
As Bernie Sanders told Congress before that important vote, "The White House policy on cash balance pension plans is a direct assault on the retirement plans of millions of American workers."
In short, IBM's pension changes brought no money into the company, sparked massive protest, generated negative publicity, harmed employees when they are old and most in need, deceived stockholders about actual earnings, led to the civil suit employees won, and led to a historic vote in Congress. Only executives gained--at company, employee, and stockholder expense.
IBM should apologize to employees, end age discrimination in its
retirement policies, and restore the earned retirement benefits in
full.