October 21, 2012
Last Wednesday, Verizon announced that pension funds for 41,000 management retirees were to be transferred to Prudential Financial Inc. This came as a shock to all of us.
The Association immediately reached out to experts in pension matters including the Pension Rights Center and attorneys who specialize in these matters. This was very unsettling news and we are extremely concerned about the safety of the pensions once they are transferred.
As you probably know, pensions are protected by a US government organization called the Pension Benefit Guarantee Corporation (PBGC). Should a corporation be unable to continue to pay pensions, existing pension funds would be transferred to this agency. The PBGC would then pay the pensions up to a limit of $56,000 per year.
However, when an insurance company assumes payment of pensions as an annuity, the PBGC does not insure those pensions. There is an alleged “safety net” provided by State Guarantee Associations in every state. This safety net provides minimal lifetime coverage that ranges from $100,000 to $500,000 depending on the state. This coverage is funded by all insurance carriers in each state and is woefully inadequate in most cases. Further, collecting from these Guarantee Associations is very complicated and they are not consumer friendly.
Your Association will be working with subject-matter experts to raise the issues of this particular situation and to get answers to the numerous questions that we all have.
Thank you for your patience. Our office is experiencing heavy call volumes. Please do not call the office regarding this issue. We will communicate information to you when it becomes available.
If you have not yet made a contribution to the Association of BellTel Retirees this year, this would be a great time. Please go to our secure, online donation site by clicking HERE.