Retirees are afraid.
Those were the words John Hyland used while advocating for a bill state Sen. Tony Avella (D-Bayside) intends on submitting to protect retirees from having their pensions sold off by their longtime employers.
Hyland, who spent 33 years working as a union chief steward for the Communication Workers of America at New York Telephone/NYNEX, a predecessor to Verizon, spoke from a firsthand perspective when he said seniors who worked their whole lives should never need to worry about the practice known as pension de-risking, or pension stripping.
“All of us are very afraid,” Hyland said Monday at a news conference in Avella’s Bayside office. “And we have every right to be.”
The fear stemmed from a practice in which a company sells the pensions of its retirees, usually to an insurance company, without notifying its owner. In some cases, retirees would see their pensions converted into annuities, which are not regulated under the federal Employee Retirement Income Security Act, and not protected under the federal Pension Benefit Guaranty Corp.’s insurance coverage.
Avella said residents in his district brought the issue to his office this year after news broke that Verizon sold off 41,000 former management retirees’ pensions to Prudential Insurance Co., putting their pensions potentially at risk in the event the purchaser ever fails. The senator immediately started drafting legislation that would protect existing retirees whose pensions were sold off, calling it one of the most important pieces he ever worked on.
In essence, Avella said his legislation would provide the same protections retirees had before their pension plans were transferred so they are not left vulnerable.
“Retirees depend on their hard-earned pensions and when companies go through the process of pension stripping, they are playing a risky game with a retiree’s pension,” Avella said. “By leaving affected retirees with virtually none of the longstanding federal pension protection mechanisms provided by ERISA and the PBGC, companies are shifting the burden of risk onto pensioners.”
The senator presented the legislation he plans on introducing next session to a packed Bayside district office filled with retirees and members of the Association of BellTel Retirees and ProtectSeniors.org. In that crowd was also Edward Stone, an expert on pension risk protection who offered his legal insight on the risks affecting seniors, specifically those who move out of state.
Stone said retirees who decide to relocate after their pensions are transferred into annuities might “unwittingly divest themselves of guaranty association coverage” and see their lifetime coverage potential drop drastically.
“I do not believe that the state guaranty safety net is sufficient to support an insolvency of a company as large as Prudential,” Stone said. “As we learned in the recent financial crisis, no company is too big to fail and Prudential, which purchased the Verizon pension liabilities, is no exception.”
Eileen Lawrence, of Douglaston, is a Verizon retiree and was one of the borough residents to bring the issue to Avella’s attention.
“It is outrageous that I devoted 37 years at NYNEX and New York Telephone to have Verizon sell off my pension to bolster their bottom line,” she said. “My fellow retirees and I once had pension protections under ERISA and PBGC insurance, but no more. Companies must not get away with stripping away protections that retirees have earned.
Reach reporter Phil Corso by e-mail at email@example.com or by phone at 718-260-4573.
©2013 Community News Group
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