Jan. 6, 2009 Press Release

For Release January 6, 2009

News Contact: 202-434-8193


Corporate Claims That Retirees are a Liability to Business

is “Morally Offensive” says Retiree Leader

Lately economists, talk show hosts, journalists and even politicians are blaming America’s retirees and union workers for the economic downturn, labeling their earned retirement health coverage as “legacy costs” and calling them too burdensome. “I and tens of millions of retirees like me worked decades to earn those benefits,” said C. William Jones, a retiree from Verizon Communications and President of the 100,000 member Association of BellTel Retirees. “For companies to now imply that retirees are a liability to them and America is morally offensive and absolutely inaccurate.”

Mr. Jones is just one of the retirees calling on the 111th Congress to act immediately towards passage of a bipartisan bill, titled The Emergency Retiree Health Benefits Protection Act (in the 110th Congress), which would prohibit employers from making post-retirement cancellations or reductions of health benefits that retirees were entitled to, without placing mandates on the employers as to what health plans they provide or monetary ceilings on the amount of health benefits.

According to Paul Miller, Executive Director of the national retiree group ProtectSeniors.Org, the situation is as dire as the bailout for the automakers, banking industry and Wall Street. Working the halls of Capitol Hill, the rapidly growing coalition has already garnered the support of retirees from 285 companies, 36 unions, 14 retiree associations and 76 governmental retiree groups.

There are currently an estimated 18.5 million American retirees and baby boomers with their health benefits being significantly threatened. If cancelled by the corporations they once worked for, most would be dumped into the federal and state healthcare systems. In effect this means their former employers would be getting an additional back door federal bailout at the expense of the taxpayer.”

The health care coverage Miller is referring to is earned retiree benefits that tens of millions of Americans earned and paid for during their working years. He says that for whatever reason, many corporations never socked that money aside and are using the current financial turmoil to threaten further cancellations and reductions.

Miller estimates, “if just half of these people (over 9 million) see their earned retiree health care benefits cancelled or significantly cut, it would overwhelm an already overburdened government health care system.”

Retirees say companies used the promise of post-employment health care to induce employees to stay with that employer or, in some cases, to take early retirement. Companies did not agree to pay retiree benefits out of the goodness of their hearts or social well-being; there were significant financial benefits and tax breaks for them. Employers benefited financially by not having to pay Social Security and payroll taxes on these benefits and funding these benefits could be deferred by companies in years when earnings were low, unlike payroll that must be paid on time. Since pensions are based on a percentage of wages, companies also saved on long-term pension costs.

This past September 25, the House Committee on Education and the Workforce held its first hearing on the legislation. At the time University Of Alabama School Of Law professor Dr. Norman Stein, an expert on the nation’s ERISA pension law testified in favor of the bill, saying Congress should pass legislation “that would make it difficult or perhaps impossible for an employer to terminate retiree health benefits after an employee has retired.” The long time advisor to AARP and the Pension Rights Center advocated Congress to “level the playing field for employees with clear, reasonable, and consistent rules.”

Without action from Congress to protect America’s retirees during the worst economic climate since the Great Depression, a nightmare scenario looms for older Americans that has already claimed retirees of several large corporations. “America’s retirees are not here asking for a handout or a bailout,” said Mr. Miller.  “We merely want companies to live up to the promises they made. Give us the health benefits we earned and paid for over decades of loyal service.”

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