Seniors Protest Gap Stores

[Earth Bound Misfit]

Teamster Retirees Mark National Senior Citizens Day By Warning Customers About Ethics Gap at Clothing Retailer

SEATTLE, Aug. 21 /PRNewswire-USNewswire/ -- Teamster retirees marked National Senior Citizens Day by leafleting at Gap stores in Seattle and Portland to protest the retailer's use of delivery company Oak Harbor Freight. Oak Harbor Freight, based in Seattle, has announced plans to eliminate the Teamster retirees' health care coverage.

"If the Gap is really serious about embracing its responsibility to people and communities, it needs to make sure its vendors are not hurting seniors and retired workers," said John Vallely, a retired Oak Harbor delivery driver.

The trucking company's move to abandon retirees would force current and future retirees to pay up to $7,992 more each year to keep their health insurance.

"If the company's plan goes through, I won't be able to afford health insurance," said James Ingraham, a retired driver. "It would be down to making my house payment or making my insurance payment. It's just devastating."

Retirees and union leaders in the Northwest plan to escalate their handbilling at Gap stores in the coming weeks as the busy back-to-school season kicks off. "If the Gap's vendor gets its way, our retirees -- the ones who serviced the Gap for so many years -- will be orphaned with no health insurance," said Al Hobart, International Vice President and Joint Council 28 President. "We cannot allow that to happen."


SOURCE International Brotherhood of Teamsters

[billyoc]

1. We can no longer permit company handling of workers' pensions.

Only unions can manage pensions, companies will always find some reason that the "can't" pay out the benefits, after they negotiated the money as part of the compensation package.

This fucking shit has got to stop, NOW.

[Earth Bound Misfit]

2. Executive benefits are playing a large and hidden role in the declining health of America's pensions

Wall Street Journal article June 26, 2006:

As workers' pensions wither, those for executives grow
By Ellen E. Schultz, The Wall Street Journal

To help explain its deep slump, General Motors Corp. often cites "legacy costs," including pensions for its giant U.S. work force.

In its latest annual report, GM wrote: "Our extensive pension and (post-employment) obligations to retirees are a competitive disadvantage for us." Early this year, GM announced it was ending pensions for 42,000 workers.

But there's a twist to the auto maker's pension situation: The pension plans for its rank-and-file U.S. workers are overstuffed with cash, containing about $9 billion more than is needed to meet their obligations for years to come.

Another of GM's pension programs, however, saddles the company with a liability of $1.4 billion. These pensions are for its executives.

This is the pension squeeze companies aren't talking about: Even as many reduce, freeze or eliminate pensions for workers -- complaining of the costs -- their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon.

Companies disclose little about any of this. But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America's pensions. Among the findings:

Boosted by surging pay and rich formulas, executive pension obligations exceed $1 billion at some companies. Besides GM, they include General Electric Co. (a $3.5 billion liability); AT&T Inc. ($1.8 billion); Exxon Mobil Corp. and International Business Machines Corp. (about $1.3 billion each); and Bank of America Corp. and Pfizer Inc. (about $1.1 billion apiece).

Benefits for executives now account for a significant share of pension obligations in the U.S., an average of 8 percent at the companies above. Sometimes a company's obligation for a single executive's pension approaches $100 million.

These liabilities are largely hidden, because corporations don't distinguish them from overall pension obligations in their federal financial filings.

As a result, the savings that companies make by curtailing pensions for regular retirees -- which have totaled billions of dollars in recent years -- can mask a rising cost of benefits for executives.

Executive pensions, even when they won't be paid till years from now, drag down earnings today. And they do so in a way that's disproportionate to their size, because they aren't funded with dedicated assets.

One reason executive pensions have grown so large is that they are linked to ballooning overall executive compensation. Companies often design retirement payouts to replace a percentage of what a person earns while active.

But for executives, the percentage of pay replaced is itself higher. Compensation committees often aim for a pension that replaces 60 percent to 100 percent of a top executive's compensation. It's 20 percent to 35 percent for lower-level employees.

--snip--

By curtailing pensions for regular workers, large companies have reduced pension obligations to them by billions of dollars in recent years. So pension obligations to regular workers are stable or shrinking at many companies while those for executives rise. At BellSouth Corp., for example, the obligations for pensions for ordinary workers have edged down 3 percent since 2000. The liability for pensions for executives is up 89 percent over the same period. A BellSouth spokesman noted that, like many executive pensions, the benefit could be lost in the event the company becomes insolvent.

The promise of any pension becomes a corporate obligation. Although the payments are in the future, the promise means the company has a liability now. And a number can be put on it.

Pfizer's promise to pay Mr. McKinnell $6.5 million a year for life in retirement equals an $83 million liability for Pfizer today, federal filings by the drug maker show. Pfizer defends Mr. McKinnell's pension as fair.

--snip--

At some companies, the only people who have pensions at all are executives. At Nordstrom Inc., the nearly 30,000 ordinary employees don't get pensions. But 45 executives do. Another retailer, Dillard's Inc., also provides pensions only to certain officers. Neither had any comment.

Companies' retirement liabilities for their executives have also grown through another little-noticed trend: Over recent years, an increasing portion of executives' pay has been postponed, via pension and deferred-compensation plans, rather than given in current paychecks.

Even if a company's liability for executives' pensions totals hundreds of millions of dollars, its employees and shareholders may never know. Companies don't have to report this obligation separately in federal financial filings. A few specify it in a footnote, and some provide clues that make it possible to derive the figure.

--snip--

When they do mention executive pensions in filings, companies often use terms that only pension-industry insiders would recognize. Time Warner Inc.'s filings include -- as part of a category called "other, primarily general and administrative obligations" -- a footnote reference to "unfunded defined benefit pension plans." Those are executive pensions.

Lumping pensions together can also give a false impression of the security of ordinary workers' plan. Someone browsing Time Warner's filings might think its pensions for regular employees were underfunded by 7 percent. This impression would be illusory. The pension plan for regular Time Warner employees has more assets set aside in it than the plan needs to pay benefits well into the future. The shortfall is due entirely to a plan for highly paid employees. That one has a $305 million unfunded liability.

--snip--

Why don't companies just fund executive pensions? Chalk it up to taxes. Contributions that companies make to regular pension plans are tax-deductible and grow tax-free. Congress set that rule to encourage employers to provide pensions for the rank and file. But a company that contributes assets to an executive pension plan gets no tax break. In fact, there's a tax penalty: Money contributed to such a plan is considered current compensation to the executives, and they owe personal taxes for it.

There's often another reason executive pensions are more costly. The expense of regular pensions can be offset not just by investment returns on the assets but also by gains that result when companies cut benefits.

Cutting a benefit naturally cancels part of an employer's liability. Under accounting rules, a canceled liability equates to a gain. That gain reduces pension expense from the regular workers' plan. So thanks both to investment returns and to gains from cutting benefits, regular pension plans are less costly than those for executives.

These accounting effects may sound technical but they matter, because companies that curtail ordinary workers's benefits often cite their pension "costs" or "expense" as the reason.

Read More @: http://www.post-gazette.com/pg/06177/701286-28.stm