According to a joint announcement from the Association of BellTel Retirees Inc. and ProtectSeniors.Org, the legislation, put forth by New York state Sen. Tony Avella, is designed to protect retirees whose former employers transfer pension obligations to an insurance company. The concern is that de-risking removes federal protection under the Employee Retirement Income Security Act (ERISA) and from the Pension Benefit Guaranty Corporation (PBGC), for retirees.
The announcement cited examples of de-risking that have already occurred, such as Verizon and General Motors selling their pension obligations to Prudential Insurance Company. A lawsuit brought by Verizon retirees claiming violations of ERISA was dismissed (see “Court Dismisses Verizon Pension Buyout Suit”).
“Retirees depend on their hard-earned pensions, and when companies go through the processing of pension [de-risking], they are playing a risky game with a retiree’s pension,” said Avella. “By leaving affected retirees with virtually none of the long-standing federal pension protection mechanisms provided by ERISA and the PBGC, companies are shifting the burden of risk onto pensioners. That is why it is necessary to provide protections to retirees whose pension plans have gone through pension de-risking. My legislation will put in place these protection mechanisms that retirees had before their pension plans were transferred.”