Edward Stone will participate in a point-counterpoint debate on pension de-risking at the NCOIL (National Conference of Insurance Legislators) spring meeting held in Savannah, Georgia March 7-9, 2014. The proposed Pension De-Risking Model Act, sponsored by Rep. George Keiser (ND) would establish protections at the state level for retirees whose pension benefits were transferred from an ERISA protected plan to a substitute pension plan, such as a group annuity contract, provided by an insurance company licensed and regulated under state law. The proposed Pension De-Risking Model Act requires mandatory disclosures, equal protection from creditors, an opt-out provision, a supplemental guaranty or reinsurance and approval for subsequent transfers.
As more companies seek to reduce their pension obligations by transferring their obligations to insurance companies via annuity buy-outs, regulation of these risk transfers, including disclosures and protections for retirees will be paramount. Retirees often refer to annuity buy-outs as “pension stripping” transactions because the offloading of pension obligations to an insurance company or other annuity provider causes retirees to lose all of the comprehensive and uniform protections intended by Congress under ERISA, including the financial safety net offered by the PBGC.
The Pension De-Risking Model Act, sponsored by Rep. George Keiser (ND), was presented for the first time at NCOIL’s Annual Meeting in November of 2013. The Pension De-Risking Model Act will be more fully explored at NCOIL’s Spring Meeting scheduled for March 6-9, 2014 in Savannah. The Pension De-Risking Model Act provides for (1) mandatory disclosures to retirees whose benefits are transferred; (2) creditor protections for retirees; (3) opt-out options for retirees; and (4) supplemental protections in the form of third-party guarantees or reinsurance.
Edward Stone presented information on the importance of protecting retirees in pension de-risking transactions at the November NCOIL meeting and can provide assistance to those concerned about the impact of pension de-risking and pension stripping transfers on retirees.
In this radio interview on Long Island’s original labor radio show, Labor Lines, Vic Fusco discusses concerns over pension de-risking, or pension stripping as retirees refer to it, with New York State Senator Tony Avella and Eddie Stone. Pension stripping is the latest tool used by corporations to remove pension liabilities from their balance sheet. The corporation purchases an annuity contract from an insurance company to replace a retiree’s pension. This has the result of robbing retirees of their protections under ERISA and the safety net offered by the Pension Benefit Guaranty Corporation. Listen to the radio show here.
New York State Senator Tony Avella will introduce legislation in the upcoming session designed to protect retirees whose pensions are sold off without advance notice. Once known as “pension de-risking” retirees refer to this method of transferring the financial risk of pensions from corporations to retirees as “pension stripping”. The method of pension stripping that seems to be the corporate favorite converts a pension into a group annuity contract causing retirees to lose the uniform protections intended by Congress under ERISA including the annual coverage provided by the Pension Benefit Guaranty Corporation. The proposed legislation is designed to replace the protections for earned benefits that were intended under ERISA with reasonably equivalent protection at the state level.
The corporate desire to shed pension obligations went into over-drive in 2012 with pension de-risking transactions by Ford, General Motors and Verizon. The pension de-risking trend allowed these corporations to eliminate their obligations to their retirees by billions of dollars. In his column published in the Hanford Sentinel on August 21, 2013 columnist Dennis Beaver answers his reader’s questions about pension de-risking and passes along Eddie Stone’s advice: “For your readers who are covered by a pension and looking forward to a comfortable retirement, I have a warning. Employers across this country have made promises to their employees which will not be honored. Simply stated, pension liabilities dramatically exceed their assets….This is a time when all present employees and retirees need to be aware of what is happening with their pension…”
Many major corporations have begun to pursue “de-risking” strategies and retirees are the victims, losing pension benfits and ERISA protections without their consent. In this video featuring Edward Stone and Jack Cohen, a leading retiree advocate from ProtectSeniors.org, Stone and Cohen explain the dangerous impact of these “de-risking” transactions.
A federal court in Dallas, Texas has certified a class action on behalf of Verizon pension beneficiaries, permitting 41,000 retirees to sue as a group over the transfer of their pension benefits to Prudential Insurance Company of America.
Edward Stone testified at a public hearing in support of HB 6148 before the Connecticut Labor and Public Employees Committee . The proposed legislation seeks protections for retirees in pension de-risking transactions.
Verizon Retirees Sue to Block Pension-Risk Transfer – Verizon’s transfer of its pension obligations to 41,000 retirees to Prudential stripped the retirees of the protections afforded them under ERISA and the Pension Benefit Guaranty Corporation (PBGC).
CONNECT
COPYRIGHT
© Edward S. Stone 2014-2020.
Photos courtesy of David Lasnick.