A couple of weeks ago, we discussed an interesting pension move that Texas-based AT&T was asking federal officials to allow, and now this week news has broken about another telecommunication’s company and its pension plan.
In a federal court in Dallas yesterday, two Verizon Communications Inc. retirees filed a lawsuit in an attempt to block the sale of the company’s pension plan. Verizon plans to sell the pension plan, which covers about 41,000 management retirees, to Prudential Insurance Co. of America.
The retirees who filed the lawsuit worked for a predecessor of Verizon and they have sought to put a temporary restraining order on the sale, which they argue would take away federal pension protections from the retirees. This is because the transaction would convert the pension plan into an annuity.
Verizon has said that the lawsuit is without merit and that the monthly pension benefits that retirees are receiving will not change after the pension plan is sold to Prudential.
The retirees, however, are worried about losing the pension protections that the federal Employee Retirement Income Security Act offers.
ERISA, which requires employers to act in the best interest of employees when administering retirement plans, applies to private employers who provide retirement benefits. Prudential, being an insurance company, may not be held to a similar standard, according to the lawsuit.
It remains to be seen whether a court will step in to stop the sale.
People here in Texas work long and hard to earn their pension benefits, and it can be very disheartening for a retiree to learn that decades of loyal service to an employer is suddenly diminished.
Source: Verizon, “Verizon Retiress Sue to Block Sale of Pension Plan,” Andrew Harris, Nov. 29, 2012
- Our Houston law firm handles legal employment concerns about pensions, benefits and compensation, among other things. More information about the laws governing retirement plans is available on our Houston Employee Retirement Plan page.