Residents in San Antonio, who hold pensions with their employer, or retirees with their former employer, may or may not know that these accounts are governed by the Employee Retirement Security Act. The federal law mandates that employers must act within employees' best interests in regard to retirement plans. It is important that such a law protects these retirement accounts, because many people here in Texas worked very hard and loyally in order to earn their pensions.
The protections that ERISA offers are very significant and this is why some Verizon Communications Inc. retirees became very upset when they learned that the telecommunications company planned to sell off 41,000 pensions. Two retirees--on behalf of 41,000--have now filed a federal lawsuit in North Texas to halt the sale.
At issue is the fact that Verizon would sell the pension plan to Prudential Insurance Company of America, which would convert the pensions into insurance annuities that would not be ERISA-protected.
While Verizon has argued that monthly payments to retirees would not change at all after the sale, retirees are very worried about what might happen to their pensions once they are no longer governed by federal ERISA law. Furthermore, they say that converting the pension to an annuity would negate the federally insured safety net offered by the Pension Benefit Guaranty Corporation. Corporate retirees, such as the ones who filed this lawsuit, have insurance under the PBGC of up to $55,800 annually.
The lawsuit also states that the sale is an attempt by Verizon to cut responsibilities to retirees who built the company. The retirees actually worked for a predecessor of Verizon.
The retirees, who spent nearly a lifetime working for the company and building their pensions, are understandably concerned about losing employment law protections and it will be interesting to watch this lawsuit unfold.
Source: Equities.com, "Verizon Retirees Sue to Halt Verizon's $7.5 billion Sell-Off of 41,000 Pensions," Nov. 29, 2012
- Our San Antonio law firm provides legal counsel regarding ERISA concerns about employment benefit issues. More information about this area of our practice is available on our Texas Employment Benefit Litigation/ERISA page.