More on Alcatel-Lucent retiree and pension issues and the acquisition by Nokia
Two announcements have been made this year by Alcatel-Lucent and many of you might think they are connected.
- Early this year Alcatel-Lucent announced they were investigating offering a voluntary lump sum buy-out of retiree pensions.
- Alcatel-Lucent announced it was being purchased by Nokia.
In fact these two announcements are not connected. The permissions that Alcatel-Lucent (ALU) had to file to amend its Pension Plan to offer the lump sum program started long before the Nokia merger was announced. In fact, at this year’s CWA T&T Leadership conference, our Research Department conducted a workshop on trends in Pension de-risking and bargaining. One of them is offering lump sum buy-outs. In a lump sum buy-out the company is paying the present value of the pension amount so that it takes the liability off their books, which means they no longer have to pay PBGC premiums or manage the money themselves.
Last week retirees received the first official notice of the lump sum offering. The CWA has requested that ALU give us a complete accounting of how they are arriving at the lump sums (interest rates, mortality tables, etc.) The CWA actuaries will review them to be sure that how they are being calculated is correct. Even if they are, that does not mean you should take it. There are many things you need to take into account, many of which are described in the packet (taxes, your health, your age, your dependents, etc.) You have until September to decide and you should use the time to consult with someone who can review your individual situation.
In terms of the Nokia merger -- There is a fear since Nokia is a foreign company our pensions would no longer be protected. That is not necessarily true. In fact Alcatel-Lucent was a foreign company and they could not take our pension funds. Our legal department and our research department both came to the same conclusion: U.S. law that currently protects the pension benefits of our members will still apply if Nokia purchases Alcatel Lucent.
Examples of those protections are: The Company may not retroactively reduce those benefits, once they are vested. Plan assets are protected from being used for purposes other than providing benefits (or reasonable administrative expenses). Therefore, the company cannot just take money from the pension plan and use it for other things. In fact that is why the CWA had to lobby for expanded legislation to continue to provide for collectively bargained medical and death benefits from the Plan. In addition, Nokia will most probably create a Nokia (USA) subsidiary which would be completely subject to US laws. So, if you are evaluating whether or not to take the lump sum, you should not take the lump just because you are fearful about the Nokia merger. It is in the company’s self-interest to keep the pension plan healthy because if it is not, they cannot pay for retiree medical from the plan and they have a contract saying they will pay retiree medical through the end of 2019.
As we get more information, we will publish it on this site.
One more point, just because our pension are protected now, we should not assume it will always be this way. There are many politicians in the pockets of corporate America who want to weaken pension rules, attack Social Security and Medicare and strip Unions of their ability to bargain. The best way to safeguard our future is to stay active in your Retiree Councils and vote for people who will fight to protect our rights and our benefits.