Janet Krueger still spends part of every day
thinking about how she can put right what she feels IBM
set wrong back in 1999. That is the year the company
converted its defined benefit plan to a cash balance
formula. Krueger was part of a crusade that accomplished
what many would have viewed as an impossibility; she
helped lead a movement that convinced Big Blue to alter
its pension strategy, broadening by 35,000 the number of
individuals it would allow to opt out of the cash balance
plan and stick with the old-style annuity plan.
Ultimately, the traditional plan was offered to anyone
who was older than 40 years of age and had more than 10
years of service at the time the plan was switched.
However, three years after quitting a 23-year career as
an IBM software consultant, Krueger is not
"We believe all IBM employees have a right to be covered
by a nondiscriminatory plan," says Krueger. "In addition,
we would like to see IBM honor long-term commitments
relative to retiree medical insurance."
Also displeased is 81-year-old Helen Quirini, who is
leading fellow retirees from General Electric Company in a
tooth-and-nail battle to convince the company that it
should use at least some of the billions of dollars of
surplus assets in its pension plan to voluntarily give
retired GE workers annual, across-the-board cost-of-living
At Qwest Communications and Verizon, retired telephone
workers are pushing shareholder resolutions that would
prohibit those companies from including income from pension
surpluses in the calculations used to set executive
compensation. Their goal: to remove any incentive that top
managers might have to pump up pension surpluses at the
expense of improvements to retiree income.
Elsewhere, retired workers from the now-defunct Pan
American World Airways Inc. have kept attorneys for the
Pension Benefit Guaranty Corporation occupied for the past
five years with a lawsuit alleging that the PBGC, as
trustee of the Pan Am pension plans, has not fairly awarded
their pension benefits.
At companies across the country, activist groups
comprised of retirees and current workers are battling
perceived benefit slights, from the termination of retiree
health care benefits to the absence of cost-of-living
increases in pension benefits. In addition to class-action
lawsuits and shareholder resolutions, their anger has
translated into street demonstrations, unionization
movements and, in the case of some cash balance plan
conversions, complaints of age discrimination filed with
the Equal Opportunity Employment Commission.
Plan sponsors may feel they are between a rock and a
hard place. At a time when employers are trying to cut
costs to deal with a slumping economy, the employee
activism movement is only becoming stronger. In September,
a federal judge in Tulsa ruled, in a class-action lawsuit
filed by former McDonnell-Douglas workers, that the company
had closed a plant in Tulsa in 1993 to deprive about 1,000
workers of benefits there were due under ERISA. That same
month, a federal judge in Illinois certified as a class
action a 1999 lawsuit alleging that changes IBM made to its
pension plan in 1995 violated ERISA by causing the rate of
benefit accrual to diminish as workers age. An attorney for
the plaintiffs says that the class could cover as many as
140,000 current and former IBM employees. IBM says the suit
is without merit and it is appealing the judge's ruling.
McDonnell-Douglas has since merged with Boeing, which has
said that it disagrees with the judge's conclusion and is
evaluating its legal options.
"I have been involved in retiree activism since the
mid-1970s, and I have never seen the current workforce so
enraged and alerted to what is happening with retirement
benefits," says Paul Edwards, chairman of the Coalition for
Retirement Security, a national grassroots organization
whose members include retiree groups from some of the
largest companies in the nation.
"This is no longer activism with one face," agrees Karen
Friedman, director of the Pension Fairness Project of the
Pension Rights Center, a nonprofit group in Washington.
"It's becoming a multi-face form of activism. It's the
whole American work force. We're seeing the start of a
How did it come to this?