Victory in Congress Will Help Protect Retiree Health Care

For retirees and future retirees, CWA and the IBEW, in a coordinated campaign with Alcatel Lucent, won a key tax code change that will help preserve retiree health care at that company and others. 

An amendment to the supplemental war funding bill, adopted by Congress and signed into law, permits companies like Alcatel Lucent to transfer more than one year's worth of retiree health costs from excess pension assets. Federal tax law had allowed employers to transfer only the equivalent of one year's costs for health benefits for retirees and their dependents, if pension assets were overfunded by more than 120 percent.

The change allowing additional retiree health care funding – if pension assets are sufficiently overfunded – will enable CWA and Alcatel Lucent to build up a VEBA trust fund (Voluntary Employee Beneficiary Association) with CWA's goal to see that fund grow to cover future retiree health costs and limit the company from trying to shift more health care costs to retirees.

Ralph Maly, CWA vice president for communications and technologies, said CWA and IBEW locals, especially those with Alcatel Lucent members, spent a great deal of time and effort urging their members of Congress to make this change.

He thanked Senator Edward Kennedy (D-Mass.) and Rep. George Miller (D-Calif.) for their efforts throughout the two-year fight to get the change adopted. 

"Especially for our Alcatel Lucent retirees, this will help preserve retiree health care going forward," Maly said.

CWA represents about 2,600 active workers at Alcatel Lucent and some 120,000 retirees and dependents.