Retired union members who worked for Western Electric, Lucent Technologies, and/or Alcatel-Lucent have spent February trying to stop a corporate raid on their pension fund.
The retired workers, who belong to the Communication Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) have been writing letters to Congress, holding demonstrations, and getting the word out about a transfer of assets from their pension fund that took place in November.
Alcatel-Lucent transferred the retirees’ assets to complete a merger deal with Nokia, the Finnish telecom hardware manufacturer.
“Nokia recently purchased Alcatel-Lucent,” reads a letter that the retirees sent to members of Congress. “Positioning themselves for the acquisition, the company moved 20,000 retirees and $3 billion in assets from the workers’ pension plan to their underfunded, mismanaged management pension plan.”
While they were working, the union retirees built telecom equipment first for Western Electric, a subsidiary of the original AT&T.
When a federal judge ordered the dissolution the original AT&T because it was a monopoly, Western Electric spun off and together with Bell Labs became Lucent Technologies, which in 2006 was purchased by Alcatel, a French company.
The new company renamed itself Alcatel-Lucent.
Nokia in April 2015 began the process of buying Alcatel-Lucent.
The underfunded managers’ pension fund was a stumbling block for the completion of the deal.
Nokia was spending $16.6 billion to purchase Alcatel-Lucent. To convince Wall Street that the purchase was a good deal, Nokia had to promise among other things that the merger would result in $1 billion in cost savings by 2019.
Shoring up an unfunded pension fund with company funds would be sending the wrong message to Wall Street, so Nokia, which was advised by JP Morgan during the acquisition negotiations, and Alcatel-Lucent agreed that Alcatel-Lucent would take care of the problem.
In November, Alcatel-Lucent shifted $3 billion worth of assets from the Lucent Technologies Pension Plan (LTPP), the union retirees’ plan, into its underfunded pension plan for managers.
Unlike the managers’ pension fund, the union retirees’ pension was fully funded and, in fact, had excess funds.
CWA and IBEW reacted immediately by filing a petition in federal court for a temporary restraining order to prevent the transfer.
The judge denied the petition, but the unions filed suit in December to reverse the transfer.
In the meantime, the unions have been organizing a campaign to raise public awareness about the raid.
Most recently, the retirees held demonstrations to publicize the raid on their pensions.
At a demonstration in Omaha near the site of a former Western Electric plant, retirees told Omaha.com that the raid on their pensions was unfair.
“Theirs is running dry, and now they want to make it up by taking from us,” said Ray Sempek, a retired Western Electric worker to Omaha.com.
At a demonstration in Columbus, Ohio, Cloyce Myers said that the raid puts his pension plan at risk.
“I don’t like it all,” said Myers to the Columbus Dispatch. “They’re taking $3 billion out of our pension. . . . That’s jeopardizing our pension, our health insurance and our death benefits.”
As Myers points out, the health of the pension plan isn’t the retirees’ only concern.
“Years ago, CWA and Lucent management worked together to change the law and make it possible to use excess pension funds to help cover retiree health care costs,” said Lisa Bolton, CWA vice president for Telecommunications and Technologies.
CWA’s and Alcatel-Lucent’s current collective bargaining agreement, which expires in 2019, and a stand-alone agreement between the union and the company both allow for excess pension funds to be used to subsidize retiree health care benefits.
But transferring funds out of the LTPP puts the health care subsidies and other benefits in jeopardy.
“The transfers, if allowed to proceed, would result in a significant reduction of the amount of excess funding of the LTPP, . . . (which) jeopardizes the ability of the Company to continue subsidizing promised post-retirement health benefits,” reads the union’s suit challenging the transfer of funds.
The transfer will lead to the “likely reduction, or eventual loss, of retiree health subsidies,” continues the suit.
The company should be using its own funds to shore up its other underfunded pension plan. said Bolton “Instead, Alcatel-Lucent wants workers and retirees to make those contributions. It’s the worst kind of corporate raiding.”