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Congressional Action Plan for Restoration of Retiree Benefits
by
John Kotson,
IBM Retiree and Alliance@IBM Member
Candidates for US Congress have been sending out questionnaires
and requests for donations to retirees across the country. The questionnaires
contain typical party level agendas. The real questions are; does a candidate
have a plan to restore the benefits that have been stripped from thousands
of retirees by greedy corporate executives. In order to support a candidate,
retirees should understand their positions on four important topics:
- Pension Plan Reform- IBM, Qwest, GE, and others have been managing
company sponsored pension funds as profit centers. By withholding Cost
of Living Allowances (COLA's) from retirees and overstating pension
plan earnings, they project huge surpluses in these funds. Existing
accounting rules allow these surpluses to be added to yearly profit
reports to compute corporate executive performance bonuses. Executives
have realized millions of dollars through this process. Meanwhile, IBM
retirees have received one miniscule COLA in 11 years and it was timed
to coincide with the loss of promised free lifetime medical benefits.
- Restoration of Medical Benefits-Most companies promised free lifetime
medical benefits for employees and dependents. These benefits have been
eroded through higher deductibles, caps on certain treatments, and mandatory
retiree insurance payments. HR 1322, "The Emergency Retiree Health
Benefits Protection Act of 2001" would require companies to restore
the medical benefits that were in effect when employees retired. Only
companies that would endure severe financial hardships would be exempted.
Government subsidies would be provided in those cases.
- Insider Stock Manipulations- Over the past 5 years, IBM CEO Lou Gerstner
has realized a pre-tax profit of 345 million dollars from stock option
sales. Last year, he received 125 million dollars, mostly through the
sale of stock options. Qwest CEO, Joe Nacchio received 105 million through
the same process. The corporate Board of Directors, that award stock
options, should be totally independent of executive management. Both
Lou Gerstner and newly appointed CEO Sam Palmisano serve on the IBM
board. Gerstner has chaired and the board for several years. This represents
a strong conflict of interest. Meanwhile, the stock value has plunged,
leaving the rest of the stockholders holding the bag.
- Corporate Financial Accounting Reform-Yearly corporate financial
statements are confusing and misleading. For fiscal1999, the IBM employees'
pension fund reported a surplus of 17.2 billion dollars. Today, the
surplus is gone, with no explanation of where the money went. Meanwhile,
IBM continued to project a return rate of 9.5-10% on the fund to enhance
profit statements. This is clearly a case of "cooking the books"
to reward greedy corporate executives and paint a rosy picture to stockholders.
Retirees deserve an honest explanation of pension fund performance.
Many letters have been written to Colorado Senator Wayne Allard, Congressman
Bob Schaffer and SEC Chairman Harvey Pitt concerning these abuses, but
nothing positive has been achieved. Pro-active representation is sorely
needed to protect the rights of retirees. We are not looking for handouts,
only that promises made throughout our careers are honored. Retirees don't
provide the huge campaign contributions that corporations do, but on Election
Day, we all vote.
John R Kotson 970-229-9352
2227 Sunstone Drive, Fort Collins, Co., 80525
E-mail address; jrkotson@yahoo.com
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