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CWA Presses Fairness, Safeguards for Workers in Pension Conversions
The Pension Benefits Protection Act of 2003, introduced by Rep. Bernie Sanders (I-Vt.) provides important safeguards, especially for older workers, who would be hit hard by new regulations the Treasury Department is considering regarding the conversion of traditional pension plans to cash balance plans.
The Communications Workers of America strongly supports this effort to blunt the harsh impact of the proposed Treasury Department-Internal Revenue Service regulations.
Workers, especially older workers, across every sector have been hit by corporations seeking to reduce their liability for benefits under the traditional defined benefit pension plan. All too often, when traditional plans are converted to cash balance plans, longterm employees realize a huge loss in the retirement benefits they are slated to receive. The Treasury Department proposal would only make a bad situation worse.
The Pension Benefits Protection Act is needed to restore important safeguards for workers, first, by giving employees who are 40 years old or who have at least 10 years of service the option to choose whether to remain in the traditional plan or move to the cash balance plan.
Second, the bill would prohibit the "wear away" feature in many cash balance plans that requires employees after a plan conversion to work many years before accruing any additional benefits.
Members of Alliance@IBM, CWA Local 1701, mobilized around IBM's attempt to unilaterally convert to a cash balance plan, a move that would have cost long term workers as much as 40 percent of their pensions. A national campaign, with congressional and community support, resulted in IBM's backing away from full implementation and enabling employees with
40 years of age plus at least 10 years of service to choose which plan better met their needs. However, this meant some longtime workers who didn't meet both criteria still suffered a substantial loss.
With other employers, CWA has negotiated over cash balance conversions in some contracts when it can reach agreements that meet the needs of workers. Workers must rely on the government to set fair ground rules for terms and conditions of employment, including retirement security. The Treasury Department's proposed regulations clearly fail that test, CWA stressed.
The Pension Benefits Protection Act would go a long way to restoring balance between corporate and employees' interests. CWA calls on Congress to adopt the Pension Benefits Protection Act as the best way to fairly address the issues surrounding cash balance conversions and fairness for workers.
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The Communications Workers of America strongly supports this effort to blunt the harsh impact of the proposed Treasury Department-Internal Revenue Service regulations.
Workers, especially older workers, across every sector have been hit by corporations seeking to reduce their liability for benefits under the traditional defined benefit pension plan. All too often, when traditional plans are converted to cash balance plans, longterm employees realize a huge loss in the retirement benefits they are slated to receive. The Treasury Department proposal would only make a bad situation worse.
The Pension Benefits Protection Act is needed to restore important safeguards for workers, first, by giving employees who are 40 years old or who have at least 10 years of service the option to choose whether to remain in the traditional plan or move to the cash balance plan.
Second, the bill would prohibit the "wear away" feature in many cash balance plans that requires employees after a plan conversion to work many years before accruing any additional benefits.
Members of Alliance@IBM, CWA Local 1701, mobilized around IBM's attempt to unilaterally convert to a cash balance plan, a move that would have cost long term workers as much as 40 percent of their pensions. A national campaign, with congressional and community support, resulted in IBM's backing away from full implementation and enabling employees with
40 years of age plus at least 10 years of service to choose which plan better met their needs. However, this meant some longtime workers who didn't meet both criteria still suffered a substantial loss.
With other employers, CWA has negotiated over cash balance conversions in some contracts when it can reach agreements that meet the needs of workers. Workers must rely on the government to set fair ground rules for terms and conditions of employment, including retirement security. The Treasury Department's proposed regulations clearly fail that test, CWA stressed.
The Pension Benefits Protection Act would go a long way to restoring balance between corporate and employees' interests. CWA calls on Congress to adopt the Pension Benefits Protection Act as the best way to fairly address the issues surrounding cash balance conversions and fairness for workers.
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