Equality:

Protecting Workers' Pensions

At a time when CEOs are paying themselves exorbitant salaries, stock options and benefit packages, corporations are slashing the pension benefits of workers who have helped build their companies.

The most heinous of the pension takeaway schemes include switching to cash benefit plans (which deprive workers of promised benefit increases from their final years of company employment), changing pension formulas with obscure "modifications" that are really cuts, and "wearaway" -- which forces employees to work extra months or years to return pension benefits to previously established levels.

These schemes reduce corporate contributions to pension plans or enable them to increase pension plan surpluses. Although employers by law cannot take pension surpluses directly for corporate purposes, they are allowed, by dint of an accounting rule, to show the earnings of the surplus on their corporate balance sheets. A recent IBM 30 percent gain in operating income was due to such a pension surplus, according to the New York Times.

Now Congress is set to make the problem worse, with the Comprehensive Retirement Security and Pension Reform Act. Passed overwhelmingly in the House of Respresentatives, this "Tax Giveaway and Pension Takeaway" bill would expand employers' ability to undertake pension fund ripoffs. A version in the Senate is even worse.

The corporate larceny of workers' pensions must be stopped. Cash balance conversions should be prohibited unless older workers' benefits are truly and adequately protected. Companies should be prohibited from cutting back promised benefits following mergers, acquisitions and sales of the division of a company.Surplus pension monies should be used to provide full cost-of-living adjustments. And investment accountability must be enhanced by giving pension plan participants the right to information on plan investments and to exert some collective control over investment decisions.

We must also work to provide pension plans to workers who are not covered. New pension plans to cover these workers should be simple, fair and portable, with employers contributing the same percentage of pay for all employees, employees able to match employer contributions with tax-deferred contributions, and lifetime monthly payments to retirees that are indexed for inflation and insured. Such plans would combine the best features of traditional pensions and popular 401(k) pensions.