‘De-risking’ company pension plan adds risk to the pensioners

To the Editor:
Americans love catchy phrases and buzz words, but sometimes such marketing tactics are nothing more than putting lipstick on a pig. That is exactly what corporations like Verizon and General Motors are doing when they refer to a risky financial transaction that they have named “pension de-risking.”
This is when companies sell off their retirees’ pension plans to investment funds or insurers, converting what were federally protected pensions into annuities, which have no federal protections at all. This has the effect of stripping older Americans of legal protections of both the federal ERISA pension law and Pension Benefit Guaranty Corporation.
In addition, these annuities become subject to a variety of state laws, dependent upon where the retiree lives. Last year, General Motors sold off 76,000 retiree pensions to Prudential Insurance, and this year Verizon sold 41,000 pensions to Prudential.
I was one of the 41,000 retired managers from Verizon who were involuntarily “de-risked.”
I am a member of the Association of BellTel Retirees, and Protect Seniors.org. Both organizations are dedicated to representing the interests of the retiree population. Membership nationally is north of 230,000 people for the Association of BelTel Retirees.
This is not just a GM and Verizon issue, it’s a growing national crisis likely to impact all retirees. In reality, this practice is really “pension stripping,” a scurrilous act against retirees and their earned pension funds.
The overarching issue is one of trust. Companies, in their drive to conserve their resources and add to their bottom line, are breaking the promises they made to their employees who have retired. Should Prudential fail to meet its obligations, 41,000 people have no federal pension protection/insurance because of this action by Verizon.
The federal government is not interested basically because this action potentially saves them money as well. Should Prudential fail to meet its obligations (remember AIG and others?), I would have to rely on the commonwealth of Massachusetts, and its pension insurance is not robust enough to fully replace the income lost.
Daniel Scotti
Taunton