The Association of BellTel Retirees all-volunteer board of directors would like to thank all of our members who have already made a contribution in the early portion of 2022. As a non-profit, we run wholly and totally on the support of our members and volunteers. Without you, we are nothing.
We are happy to report that in the 1st Quarter of 2022, member support increased over the same period compared to 2021, but we still have so much more to do and so far to go on our agenda for this year. Simply put, we can only be successful with your strong and continuing support.
Whatever you can do to support our mission to advocate for the protection of our earned retirement benefits, pensions, and de-risked pensions, we implore and thank you to do.
Some of you may have read that the pace of defined benefit pensions being spun off to third party insurance and private equity firms has increased quite significantly. It is a scary thing to consider when our former employer cuts the chord.
Last year major U.S. companies – including Hewlett Packard and Lockheed Martin – transferred more than $40 billion in their retirees’ pensions to insurers!
Since 2012, Verizon first transferred 41,000 management pensioners to Prudential, the sum total transferred has reached $220 billion (with a “B”)!
What many might fail to recognize is that insurers that have previously taken over control of these precious pension assets have now begun to sell off control of these retiree assets to other third-party investors. This is known as a subsequent pension asset transfer.
First, people needed to worry about the security of the insurer that takes over their pension assets.
Now that concern is going to morph into. How secure is the private equity investment company that subsequently assumes control of our pensions? In many instances it could effectively be everything we might have set aside to survive on in our retirement years.
A recent subsequent transfer took place when Fortitude RE took over an astounding $31 billion in annuity assets from Prudential. Just who is Fortitude RE, and how rock solid are they? Also what are the assets in which they are investing retiree pension assets?
Founded five years ago in 2017, Fortitude RE is a reinsurance firm jointly owned by the Carlyle Group and T&D Insurance Group.
The company’s marketing material advises that it “helps insurance companies around the world solve their most complex risk transfer challengers by designing and delivering bespoke solutions.” The company further explains that it is “the marketing name for FGH Parent, L.P. and its subsidiaries, including PALAC, Rx, FRL and FIRL.” Got that?
Then it goes on to explain, “Each subsidiary is responsible for its own financial and contractual obligations.”
What it does not explain is; Where does that leave retirees? The answer: With lots of new questions and few solid answers.
Shifting Sands
Many active union-represented employees and retirees have explained that they are comfortable knowing that their pensions have not yet been transferred out and are still firmly planted within Verizon’s management and oversight. Well, those sands may have begun to shift.
As reported in the Spring 2022 BellTel Newsletter and countless calls and letters from members, Wells Fargo has transferred the management of union retiree pensions to Principal Financial, as Wells sold off its retirement business, which focused on record keeping and administrative services and more. That takeover took effect April 1, 2022.
Might Verizon attempt to follow its 2012 playbook by looking to spin off more pension assets as interest rates have undergone a seismic shift after ten years of super low interest rates?
Took a Buyout, Think You Are Safe?
Some of you out there who took a lump sum and walked away, might think you dodged a bullet. Well, if AT&T and DuPont’s actions on January 1, 2022, are any guide it’s time to recommit to being involved in the fight for our retirement security.
Many of our brethren at these two companies were shocked and saddened when their earned life insurance benefits were simply cancelled. Now if we are all young, healthy and in our 30’s or 40’s getting life insurance is easy and cheap. But the action of these corporate leaders – waiting until our twilight years and forcing us to buy at potentially sky-high rates – is atrocious.
When we went to work for the company, our compensation was not just our take home pay, but also the deferred income – our pensions – and deferred benefits that we would receive in retirement. Should retirees lose even more, including prescription and supplemental health coverage, it would be a travesty of justice.
Both management and crafts’ medical coverage premiums are still paid from the respective Defined Benefit Pension Trusts. So, you have much of value remaining on the retirement benefits table.
This is why we must all remain strong. It is why we must stick together. It is why we must pay close attention and be vocal and focused advocates for the protection of our retirement security, now and continuing into the future.
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