COMMON SENSE

This is just the beginning of massive law suits which will be filed by pension plans participants.  The government has imposed rules and changes to pension plan sponsors by the Pension Protection Act 2006.   You have to understand the difference between defined benefit plans and defined contribution plans.  In the roaring days of spectacular stock market gains, everyone wanted to participate in the the gains.  Even the employers, who by unburdening themselves of a “defined benefit plane”, switched to a defined contribution plans.

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Under the defined benefit plan rules, employees are guaranteed a specific dollar amount upon retiring.  Unfortunately, 75% of the SP500 companies that have these types of plans, have not contributed the minimum to their employees accounts.  So, when the opportunities comes along to switch, ie. mergers, the company dumps the defined benefit plan and switches the employees to a “defined contribution” plan.  The defined contribution plan has not such benefit guarantee, only what the employees themselves contribute.  Therefor the burden of providing  a “secure, guaranteed retirement” is placed squarely on the shoulders of the employees and not the company.   Currently there is an estimated 100 trillion unfunded liabilities!

Telephone company retirees have filed a complaint for proposed class action relief under the Employee Retirement Income Security Act (ERISA) charging that they and over two thousand others were involuntarily switched in November 2006, post-retirement, from the financially secure Verizon Communication Inc. (NYSE: VZ) pension plans to pension plans sponsored by a newly spun-off company, Idearc Inc. (OTC: IDARQ).

Less than two years after Verizon transferred the retirees, Idearc encountered financial problems and began cutting back various earned retiree benefits. These benefit reductions were not experienced by retirees remaining in Verizon’s pension plans. In March 2009, Idearc filed for Chapter 11 bankruptcy.

Therefore, Plaintiffs filed a proposed class action on November 25, 2009 in the U.S. District Court for the Northern District of Texas, Dallas Division. The Complaint filed in Civil Action No. 3: 09-CV-2262 charges pension plan administrators with numerous ERISA violations including:

• – Failure to provide requested plan documents;
• – Breach of fiduciary duty for refusal to disclose pension related plan
• information;
• – Breach of fiduciary duty for failure to comply with pension plan
• document rules;
• – Various other ERISA violations justifying court ordered declaratory,
• injunctive and other equitable relief;
• – Unlawful refusal to make payment of Verizon pension plan benefits;
• and
• – Unlawful interference with retirees’ rights to receive Verizon retiree
• pension and welfare benefits.

FinancialWire™ – http://www.financialwire.net/

Technorati Tags: business, Chapter 11 Title 11 United States Code, Employee Retirement Income Security Act, ERISA, Human Resources, law, Lawsuit, pension, Verizon Communications

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