Chump Changed

The pay was low, but working for Ma Bell meant a worry-free retirement. Now Qwest is sending out the pension checks, and local retirees say they're getting the wrong number.


In 1963 Ohio-based White Motor Corp. took over Minnesota-Moline, a farm-equipment manufacturer with plants in Hopkins and Minneapolis. As part of the purchase, White Motor inherited the Moline pension plan. In 1972 the new company closed its Minneapolis plant and attempted to eliminate the underfunded pension. The union that had represented workers at Moline managed to keep the plan in effect through 1974--when the Minnesota Legislature passed a law requiring full funding of pension benefits whenever an employer ceases to operate a place of employment or a pension plan. In 1978 the matter made its way to the U.S. Supreme Court, which agreed with the union that White Motor was obliged to continue the Minnesota-Moline pension plan.

In the meantime Congress had gone to work on the issue of protecting employee-benefit rights, noting in September 1974, in a 200-page law known as the Employment Retirement Income Security Act, or ERISA, that the "continued well-being and security of millions of employees and their dependents are directly affected by these plans; that they are affected with national interest; that they have become an important factor affecting the stability of employment and successful development of industrial relations; [and] that they have become an important factor in commerce." The law's main purpose was to stop companies such as White Motor from buying other businesses and eliminating their pension plans. ERISA requires employers to generate financial reports and to disclose information such as pension assets, participation in and payment into pensions by more than one company, and minimum-funding standards.

Craig Lassig

But former Bell workers and other advocates for retirees complain that ERISA fails to address many of the problems that plague pensions now, 26 years after the law was passed. The law doesn't deal with many health benefits or cost-of-living increases, does not require employers to continue to fund solvent pensions, and, most confusing, does not say what should occur when a retirement fund accrues a surplus. Under federal law, in other words, Qwest is under no obligation to do anything other than to continue making the Ma Bell pension payments.

Equally disconcerting is the fact that virtually every time the law has been tested in a courtroom, it has been interpreted differently, and in the narrowest way possible. In each case, the retirees maintain, the law has been read as too vague to stop an employer from rewriting the company's pension rules.

Dick Johnson, head of the Minneapolis Central Labor Union, remembers the roots of ERISA very well. "The Minnesota-Moline situation made it a national issue, and when we sought protection here for that pension, it went on to change things," he recalls. "The whole thing is much bigger than U S West and various Bell operations. This is a multi-employer issue."

Sitting in an office he still keeps on the fifth floor of the Labor Centre building in downtown Minneapolis, Johnson is dwarfed by three large, framed paintings on one wall of Floyd B. Olson, Minnesota's Farmer-Labor Party governor during the 1930s. On the wall behind him is a painting depicting a lineman atop a telephone pole in a snowstorm. Johnson spent 40 years with Northwestern Bell and U S West, becoming a telephone technician, and then working as a union representative. In 1980 he was elected president of the local chapter of the Communications Workers of America. By the time he retired in 1996, Johnson was head of the Central Labor Union, the local federation of labor groups.

Johnson graduated from Central High School in Minneapolis and began working at a local grocery-store chain in the 1950s. In 1955, at the age of 19, he took a job with Northwestern Bell collecting the change in pay phones, gathering nickels and dimes around the metro area. He had to take a pay cut from $100 a week to $46 a week when he went to work for the phone company, but he thought it was a savvy decision. "The supermarkets were always coming and going, but the telephone company was going to stay," he says. "We were working for what they referred to as a deferred-wage pension."

Johnson notes that back in 1974 when Congress passed ERISA, no one imagined that pension funds might accrue surpluses. But when the red-hot stock market of the Nineties changed that, the retirees assumed that under the spirit of the law, all of the money earned by the fund would be used to beef up benefits. "The company used to negotiate cost-of-living increases [for pensioners] every couple years on good faith," he adds, noting that there was no legal obligation to do so. "But it just quit." That same renewed fascination with the stock market made U S West more anxious than ever to appear profitable: "A surplus shows growth, so why would they pay it out?"

Mary Ellen Signorille, a pension attorney for the American Association of Retired Persons (AARP), says that ERISA is so complex that after 20 years studying the law, even she still isn't entirely clear on its provisions. "A surplus is more dicey than usual pension questions," she explains. "In the late Eighties and Nineties, we were seeing many companies with surpluses, and more pension plans being terminated. There are ways to circumvent certain parts of pensions without taking money out directly. Morally we could talk about it all day, but legally it's okay."

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