2009 NCRO Washington Trip

Trip Report – NCRO Washington 2009

September 15th –17th 2009 NRLN Lobby Effort

NCRO in Washington DC
NCRO representatives in Washington DC
Chuck Austin, Mike Kane, Deb Morrissett, Dana Oliver, Stan Hurst, John Glotzbach and Chris Dyrda attendees from NCRO.

Arrival and Briefing:
Conference participants met in the afternoon of Sept. 15th at the Holiday Inn for a briefing session conducted by the NRLN. The NRLN conference had 70 people attend from 23 states and 40 Congressional Districts. For comparison, the AARP had 50 participants for their most recent campaign. Retirees from Lucent, Kodak, Delta Airlines, GM, Chrysler, Quest and others were represented.

NRLN represents people from 87 companies with 2.1 million retirees. There are 32 retiree organization members of NRLN, with 216,000 members in the formal organization. The Capwiz system has been used to send 40,000 letters to Congress.

NRLN offers homeowners and car insurance to members at discounted rates. It is looking at life and health care insurance as well. Packets used to brief Congress were distributed and reviewed with the attendees. Marta Bascom, NRLN Executive Director, and Michael Calabrese, Legislative Advisor, provided an overview of NRLN’s priority initiatives: Health Care reform, Pension Asset Protection, Bankruptcy Reform, and PBGC Rule changes.

Congressional Visits:
Mike Kane organized the following outlines for our attendees when speaking to Congress:

  1. Who we are and represent – NRLN retirees, Chrysler Retirees (NCRO), GM. Salaried retirees include clerks, admin assistants, and engineers, IT etc.
  2. Congress needs to listen to us
  3. We strongly support our companies
  4. We are not asking for tax dollars
  5. We do want legislation that protects the bargain that our companies made with us, not a handout, or bailout. It is deferred compensation, morally and ethically owed us.
  6. EEOC issue: Companies can’t break the bargain because you want too improve benefits for active employees.

Pension Issues:

  • Retain our deferred compensation (pensions)
  • No raiding pensions funds for severance unless pensions are funded at 120%
  • Align PBGC and ERISA accounting methods
  • Monitor PBGC activities

Healthcare Issues:

  • Set maximum limits on out-of-pocket costs under Medicare
  • Support maintenance or cost to retirees with tax credits
  • Allow pre 65 to buy into Medicare
  • Close the donut hole
  • Changes for active employees not to affect retirees
  • Regarding national health care – do no harm to retirees

We met directly with Congressman Kildee who understands the NRLN position very well and was most supportive. We met with aids from the offices of the following Congressmen (it is worth noting that aids write most of the legislative positions):
Gary Peters
Carl Levin
Debbie Stabenow
John Dingel

We left packets at the following Congressional offices:
Sander Levin
Mike Rogers
Bart Stupak


PBGC Meeting September 17th

Cathy Cone, of the Delta Retirees Organization, arranged a meeting with the PBGC, Pension Benefits Guarantee Corporation, on K Street to address concerns of many retiree groups, including, Kodak, GM, Chrysler, NRLN, Delta Pilots, Lucent, Quest and others. Approximately thirty people were in attendance, of which seven were PBGC federal employees.

The PBGC has 850 Federal employees who administer the distribution of pension funds that have been terminated. The head of the PBGC reports to a Board consisting of The Department of Labor, the IRS and the Treasury Department. The head of the PBGC is a Presidential appointee, and has yet to be named. Vince Snowbarger is the acting Director.

Chris Dyrda, Stan Hurst and John Glotzbach attended for the NCRO. Michael Rae Jeffery Speicher hosted the two and a half hour meeting. Bill Kadereit, of the NRLN, began the discussions. The PBGC was given a list of questions prepared in advance by the NRLN Bankruptcy Committee, headed by Will Buergey.
Bill Kadereit informed the PBGC of the NRLN’s efforts to petition Congress for changes to the bankruptcy laws to include:

  • Appointment of 1114 Committees for all large bankruptcies, and to prohibit judges to disallow an 1114 because of the Reservation of Rights clause.
  • Not allow Pension Plan Terminations unless the Executive plans are subject to the same termination conditions.
  • Require minimum funding of plans and provide for administrative status of retirees claims
  • Ensure retiree representation on the creditors committee

The discussion went to the issue of transparency and accounting practices. John Glotzbach asked why the PBGC reported in a press release that the Chrysler funds were $9 billion underfunded when the ERISA-required reports showed only $1.9 billion underfunded (90% funded).

PBGC explained that termination calculations include assumptions that are different from the ERISA requirements:

  • Earlier retirement age is assumed for current employees at plan termination
  • Liabilities are computed using private insurance company annuity purchase rates

There was a call for common assumptions and transparency in funding status calculations between ERISA plan reporting requirements and PBGC plan termination values. Whenever a defined plan falls below 80%, or upon termination, the plan sponsors must provide information required to complete a 4010 form, which the PBGC uses to calculate the funding levels at termination. The information that a company provides in kept confidential, and is not available to retirees, by law or PBGC regulations. PBGC cannot tell retirees what termination values are, or how they were calculated.

It was asked if we could get that information using FOIA, the Freedom of Information Act, and was told by the PBGC no. The PBGC claims it is currently $33 billion underfunded in total based on their methodology of calculation of it’s liabilities using annuity purchase rates from private insurance companies. So it’s underfunding estimate is probably grossly overstated. They do not make these claims, released to the press, to petition Congress for relief. The law requires this reporting. The attendees understood that it is not in their best interest to have taxpayer’s bail out the fund, or to allow corporations funding relief under the Pomeroy Bill. Relief under that Bill could be extended for 15 years.

A better alternative is to increase the tax deduction for funding pensions. Recent IRS rules allow corporations to extend tax deductions to funding plans to 150%, even though most corporations don’t avail themselves of that option. John Glotzbach pointed out that Chrysler did fund the salaried plans to full extent of the deduction when he managed the funds.

The PBGC did negotiate with Daimler to fund the Chrysler pensions $200 million per year for three years and provide an additional $200 million should the Chrysler plans terminate. The point being that the PBGC does negotiate to maximize plan funding. That funding was spread unevenly among certain Chrysler qualified plans, with the obvious intent to reduce the PBGC’s termination liability, not necessarily to enhance some retiree’s benefits. Of the $600 million only $23.6 million (3.9%) went to a salaried employees plan (Chrysler pension plan, nothing to SERP), although the salaried plans have about 30% of
the combined liability.

The question of foreign companies buying and owning U.S. companies was discussed. The PBGC has limited negotiating power with foreign companies that fund plans, terminate plans, or leave U.S. operations, unless they have a U.S. presence.

There was little opportunity to address the prepared questions directly. The Delta Pilots asked the PBGC for further consideration of look back. And the PBGC was asked to allow for more retiree participation in rule making and applying rules to individual plans upon termination. The Delta Pilots were particularly hurt by PBGC rules because they received partial buyouts and had plan changes within five years before termination.

The PBGC cannot lobby Congress.


Conclusions and Follow Up:
Attendees must follow up with thank you letters and emails to Congress
NCRO needs to work closely with NRLN and support their efforts; a NCRO position on the NRLN Board would facilitate that end.

The NRLN and the NCRO need to continue to lobby Congress to change ERISA to provide for:

  • Public disclosure of all 4010 filings and calculations.
  • Change the PBGC reporting structure so it is accountable to only one agency
  • Change the appointment of the PBGC Head to make that choice less politically motivated, much like the head of the Federal Reserve. Extend the appointment to a longer term.
  • Allow retiree participation on the PBGC Board of governance.
  • Allow retiree participation in PBGC asset management.
  • Communize the accounting assumptions between ERISA fund reporting and PBGC plan termination-funding calculations.
  • Raise to Administrative Status retiree claims to assets in bankruptcy.