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As Retirement Benefits Become So-Called Corporate Liabilities, Retirees Fight Back
By Jack Cohen June 29, 2021
The rules of engagement between employer and retiree have changed.
When many Baby Boomers joined the workforce, it was a time when America was experiencing a growth spurt, industry was rapidly expanding and the market demand for young, bright talent was higher than ever.
Private companies were willing to pay competitive salaries, while public utilities, due to budgetary constraints, were willing to offer relatively (at that time) inexpensive health benefits and pension commitments to their recruits. To a young person with a growing family, this was extremely appealing.
In countless cases, people sacrificed higher wages for an ironclad employer commitment of healthcare and a defined benefit pension through one’s retirement years. For many, the enticement of long-term retirement security was prioritized over immediate wage gratification in our working years.
But that was then. Today, it’s as if Baby Boomers are playing a game of pro football and these companies have decided to change the rules in the middle of the fourth quarter!
Over the years, that healthcare became much more expensive for employers. Today, companies call these “legacy costs,” thinking of fulfilling their end of the bargain as a proverbial Albatross, right around the time that those talented young people they worked so hard to recruit and entice were getting ready to retire.
Those young workers not only somehow aged over the years of their employment, but they had the unmitigated audacity to actually live long enough to be eligible to receive that which they had been promised. Can you imagine?
Evidently, America’s retirees’ long survival was not built into the original corporate actuarial calculation, and thus became a problem crying for a solution. Large employers in the private sector began calling upon the Financial Accounting Standards Board (FASB) to come to their collective rescue, developing a draconian set of rules and what I like to call “accounting gymnastics” to alleviate corporate suffering.
Remember, every dollar “lost” to a retiree’s health benefits and pension was a potential dollar not available to be showered upon executives in the form of “Golden Parachutes,” bonus compensation, stockholder dividends, share buybacks and other ways that publicly traded corporations would rather divert their money.
So, a set of helpful accounting rules was, in fact, established by the FASB to make it easier on the corporate balance sheets. These rules allowed companies to play fast and loose with actuarial assumptions by underfunding healthcare and pension obligations
By simply reducing benefits to retirees, it causes a reversal of accruals, and upper management can appear as heroes at shareholder meetings, without selling an additional product or service.
Everyone was happy with this, of course, except the retiree!
The gradual erosion of health benefits was then matched with increases to out-of-pocket costs. Co-pays and deductibles climbed while health and insurance coverage continued to diminish, just at the time in retirees’ lives when they needed it most.
The employees who fully gave 25, 30 or even 35 of their working years to these companies—missing boy scout meetings, dance recitals, and other milestone events they can never get back, in return for being taken care of later in life—are now finding, after they already traded away their labor as part of that grand agreement, companies aren’t keeping up their end of the deal.
With employers turning their backs, and tightening their wallets, on loyal, aging former employees, Baby Boomers have had to organize and stand up for themselves to ensure they get what they were guaranteed all those decades ago.
It is in the spirit of protecting and preserving those benefits that the Association of BellTel Retirees was born 25 years ago.
The Association was started in 1996 by seven management retirees and has grown into a coast-to-coast organization with 134,000 men and women from what was the old Ma Bell System (if you’re old enough to remember what that was).
Most were telephone people employed by one or more of the “Baby Bells” like Bell Atlantic and NYNEX, that were spun off the breakup of AT&T in 1983. The BellTel retirees also include retirees from AT&T, Western Electric, Lucent, Directory Operations and many other permutations. Indeed, some may be retirees of recent acquisitions of Verizon or AT&T.
For 25 years, the purpose and mission of this group of activist seniors—of which I am proud to be a part—was the protection of earned health benefits and pensions. All the Association’s board members are unpaid volunteers who bring with them skills developed over the span of their working years, and these skills have helped elevate the organization, proving that when Boomer retirees band together, there’s power in numbers and actual change is possible.
The Association has sponsored shareowner proxy campaigns going back to before the company was known as Verizon, when it was NYNEX. These campaigns have enjoyed unprecedented success: BellTel-backed proposals have won eleven times!
Three of these campaigns won a majority shareholder vote, pushing back against golden parachutes and runaway executive compensation by making Verizon the first Fortune 100 Company where shareholders approved a say-on-pay proposal.
Prior to BellTel’s first celebrated proxy win, no shareholder proxy proposal opposed by the corporation had won any vote in the more than 125-year history of the Bell System.
On eight other occasions, the Association’s proposals forced the company to the table and were negotiated off the ballot in exchange for corporate governance changes that benefited all shareholders.
The Association has also been successful in bringing forth litigation to protect retirees’ rights, twice going all the way to the U.S. Supreme Court—a true achievement when you consider the fact that less than one percent of all cases appealing to the Supreme Court even get past the clerks.
Looking ahead, the Association not only plans to continue its fight to amend, strengthen and modernize the 1974 Employee Retirement Income Security Act (ERISA) law, as well as work for protections on the state level, but also hopes to further build upon its quarter century of success as a presence at the AT&T Annual Shareholder proxy effort next year.
That’s because of poor decisions leading to reduced dividends to shareholders and leveraging decreased retiree benefits to close the financial shortfalls, with reductions to benefits aimed at the surviving widows or widowers of retirees.
Apparently, imposed caps to insurance and death benefits will also directly impact those who are left behind. This is “legally permissible,” but morally reprehensible!
And considering that AT&T’s recently retired CEO got a $64M golden retirement parachute for himself, this is particularly galling. It’s just the latest example of Baby Boomers, who signed on the dotted line all those decades ago, getting shortchanged in their retirement years.
It is up to all of us to fight for that which we were guaranteed at the start of, and throughout, our careers. The battle to maintain the benefits we so rightfully earned has brought ex-management and former union workers together under an idea called the Association of BellTel Retirees. Those groups now come together in harmony.
Our common bond is self-preservation, for the protection of these vital earned benefits, and our group of “old,” dedicated retirees who make up the Association of BellTel Retirees recognize the importance of this fight.
Ours is not just a social group of older people getting together to play bingo. These are activists, most of whom would no doubt prefer to spend the remainder of their time on this Earth with their children and grandchildren—I know I would. But instead, we find ourselves as busy as we ever were, fighting for the rights we all worked a lifetime to earn.
Join our movement for retiree economic justice!
Jack Cohen is Chairman of the Association of BellTel Retirees, Inc., based in Cold Spring Harbor, NY. The Association can be reached at belltelretirees.org.
Pictured from Left to Right: Tommy Steed, Don Kaufmann, Una Kelly, Bob Rehm, Jack Cohen, Pamela Harrison
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