Protect Earned Benefits

By Edward Stone, Esq.

Last year the Association of BellTel Retirees formed a strategic alliance with Retirees for Justice to continue the Association’s leadership role in fighting to protect earned benefits for retirees and their families. As we move forward into 2022 and beyond, we see many challenges and opportunities ahead.

In January of 2022, AT&T retirees had their life insurance benefits slashed. The same thing happened with the former DuPont retirees who had their pension and retirement plan off-loaded by DowDuPont, to a new agricultural company called Corteva.

Soon after Corteva took over the DuPont pension plan they allegedly did a “study” of companies of comparable size and determined that the life insurance benefits they were providing to the old DuPont Retirees were too rich!

So, they got rid of all of the life insurance benefits that had been promised to DuPont retirees decades ago. At the same time, Corteva offers highly subsidized life insurance benefits to its current employees. AT&T Retiree friends, does this sound familiar? Ironically, the DuPont retirees lost their life insurance benefits on the same exact day as the AT&T folks.

Regrettably, it seems more and more like targeting retiree earned benefits is the best way to improve stock performance. In fact, Corteva improved their financial statements by kicking retirees to the curb to the tune of close to a cool Billion dollars. Corporate executives were handsomely rewarded for their shrewd maneuvering.

But what about the retirees? What happens when they lose life insurance benefits when they can least afford or qualify for replacement coverage?

This issue was brought to the attention of the Department of Labor (DOL) and an investigation into the practice was undertaken by the Employee Benefits Security Administration (EBSA) with significant input from Retirees for Justice. Unfortunately, the DOL concluded that under existing law they lacked the authority to prevent a plan sponsor from exercising its “business judgment” and terminating what is known as a “welfare benefit” for economic reasons.

Welfare benefits include both health insurance and life insurance, and these benefits can be reduced or eliminated without violating ERISA as they are not considered “vested” benefits like a pension. Even though DuPont in its heyday was more than triple the size of Corteva, Corteva management succeeded in convincing EBSA that the cost of maintaining life insurance was not economically viable.

Investigations are underway into whether or not the spin-offs were done with the specific intent of offloading retiree liabilities in violation of ERISA.

The Association of BellTel Retirees and Retirees for Justice believe that taking away life insurance benefits from retirees and their families is unconscionable and has to be addressed. Currently, Retirees for Justice is looking to introduce an amendment to ERISA to prevent plan sponsors from discriminating against retirees by cutting life insurance benefits and requiring that those benefits be reclassified under ERISA as vested benefits.

This is no small task as the cost of maintaining insurance coverage for retirees is substantial and companies like Corteva have 5 times more retirees than employees. Still, cutting life insurance coverage should not be an easy way for corporate executives to line their pockets at the expense of the greatest generation.

Our proposed ERISA Amendment contains other retiree friendly provisions that we plan to share in the weeks ahead. Stay tuned as we push this initiative forward in 2022.

Retirees for Justice is expanding its scope and bringing in members from other groups around the country who have come face to face with the onslaught of cuts and benefit reductions that have become all too commonplace these days.

We most recently brought in a number of GE retirees, and we are in the process of integrating the General Electric Retiree Benefit Solutions folks into the Retirees for Justice family. Similar efforts are underway with other groups as we believe that there is strength in numbers, and we are all better together.

GE retirees already had their life insurance benefits reduced and their pensions off-loaded to an insurance company known as Athene – which is now owned by a private equity firm known as Apollo – once run by the now disgraced Leon Black. More and more private equity firms are getting into the insurance business and this poses unique risks for those whose pensions have been de-risked into an insurance annuity.

Unlike healthcare and life insurance, ERISA still protects pensions from reduction in retirement because they are considered vested benefits. However, since 2012 more than $200 billion in pension liabilities has been offloaded to insurance companies in pension de-risking transactions, which allow a Plan Sponsor to amend its Defined Benefit Plans to kick out retirees without giving them a choice.

It happened with Verizon in 2012 and the Association of BellTel Retirees has been a tireless advocate in favor of transparency and accountability in de-risking transactions. Through its affiliation with Retirees for Justice the Association is making a big push to change state laws to replace protections that are lost in pension de-risking transactions with reasonably equivalent protections under state law.

New BellTel Chairman Thomas Steed is pushing for a 2022 hearing before the New York State Insurance Committees – beginning with the Assembly Committee chaired by Kevin Cahill. Retirees for Justice is coordinating this effort and will be submitting memoranda of support to both the Assembly Committee and the Senate Committee.

New York Senate Bill Number S2885 sponsored by Senator Andrew Gounardes and Assembly Bill Number A6099 sponsored by Assemblyman Peter Abbate are both in their respective insurance committees. These two Bills are designed to replace the uniform protections intended by Congress under ERISA with reasonably equivalent protections under New York State Law.

Retirees for Justice is actively looking for support from New York constituents. Please reach out to me directly at estone@retireesforjustice.org if you are a New York resident and would like to write a letter or email of support.

As we move into the 2022 state legislative sessions, we need your support more than ever to stop the assault on retirees and their families.

Please join Retirees for Justice by going to www.RetireesForJustice.org and click on “Join Now.” Membership is free! This small step of support will greatly assist the Association of BellTel Retirees in fighting the good fight to protect earned benefits for retirees and their families.

 

This article was originally published in the 2022 Spring Newsletter.