More activist retirees put squeeze on companies
Carrie Biggs-Adams sounded exuberant on her cell phone. She was driving home last Wednesday from the annual meeting of General Electric Co. in Richmond, Va.
On behalf of her union, she had made a motion to require shareholder approval of outside directors' retirement benefits.
And while the motion had failed to pass, fully 33 percent of GE shares had been voted in favor - huge compared to what most management-opposed shareholder resolutions get.
To Ms. Biggs-Adams, it was a victory. Actually, the issue wasn't primarily the $75,000 pension given directors after five years of service. It was about winning more attention for her union's goal: regular cost-of-living adjustments (COLAs) for the smaller pensions of most present and future retirees from GE (and such subsidiaries as NBC, where Biggs-Adams is an engineer).
For a year or so, matters of corporate pension security and justice have been building as a public issue.
"A lot of us baby boomers are looking retirement in the face," says Olivia Mitchell, a pension expert at the University of Pennsylvania's Wharton School in Philadelphia. "We're asking, 'how will we live for the next 30 years in retirement?' "
Faced with demonstrations, sophisticated publicity campaigns, backing of protesters by some large institutional investors, the use of the Internet to rally employees in many communities, and a possibility of legislated reforms, companies are making concessions.
Nine days before its annual meeting, GE announced it would boost benefits to 134,000 pensioners retired by 1997. It was the first such hike since 1996.
Most companies providing regular pensions - known as defined-benefit pensions - periodically and voluntarily raise the pensions of their retirees. But they commonly offset only a portion of inflation losses.
So many pensioners see the purchasing power of their pensions shrink over time. Now some are actively pushing for COLAs, noting that the bull market in stocks has left many pension funds with huge surpluses.
Paul Edwards, chairman of the Coalition for Retirement Security (www.pensions-r-us.org), says membership in his non-profit organization has doubled in the past eight months. Employees and retirees of a dozen companies belong to the coalition. Targets this month include Bell Atlantic and AT&T.
Mr. Edwards was among those demonstrating in Richmond last Wednesday, wearing a lime-green sweat shirt with red-and-black lettering explaining the pension issues.
Also there: Karen Friedman of the Pension Rights Center, another Washington-based group seeking pension reform.
GE Chairman Jack Welch let the protesters have their say, Ms. Friedman notes.
That wasn't the case, however, when a similar pension resolution was brought before shareholders at the annual meeting of IBM in Cleveland a day earlier. Louis Gerstner, IBM's chief executive, shut the meeting down a half-hour early, just as Rep. Bernie Sanders, an independent in Congress from Vermont, stepped up to the microphone to speak on what he regards as an unfair switch by IBM to a new pension plan.
Mr. Gerstner must have felt "threatened," says Friedman. "It was totally impolitic."
Mr. Sanders is among those in Congress proposing reforms that will put new requirements on companies, such as IBM, that are converting their old-style pension schemes to "cash-balance" plans.
These plans were spreading rapidly, at least before IBM employees raised an attention-getting fuss last year. The plans usually reduce the pension benefit of long-time employees and often cut overall company pension costs.
Under siege, IBM last year enlarged the number of employees able to choose between the old and new plans. The petitioners sought free choice for all IBM's US employees.
Gerstner argues he can't do more and remain competitive with New Economy companies that mostly provide 401(k) plans and stock options instead of pensions to attract mobile young employees.
Legislation before Congress would require companies to disclose to employees the full story of their gains or losses when a pension plan is changed. It would ban other cash-balance features that harm employees financially.
One congressional source sees a good chance of reform legislation passing this summer or fall.
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