An association representing Verizon Communications management retirees has filed a federal lawsuit seeking to halt the telco’s plan to transfer 41,000 employee pension accounts with assets totaling some $7.5 billion to Prudential. The telco said the suit is without merit.
Attorneys representing Verizon retirees in conjunction with the 128,000-member Association of BellTel Retirees filed for a request for an immediate temporary restraining order to stop the telco in the U.S. District Court for the Northern District of Texas. The suit charges that Verizon's plan to transfer the retirees' pensions from the Verizon Management Pension Plan into Prudential-issued insurance annuities violates the federal Employee Retirement Income Security Act.
"On behalf of 41,000 Verizon retirees scattered across the country, who are being given no choice, no voice and no protection in the transfer of their pension assets, we are calling upon the company to reverse this action and halt this predatory business transaction that will impact many retired Americans, who labored a lifetime to fund their earned pension benefits," retiree association president C. William Jones said in a statement.
In a statement, Verizon executive vice president and general counsel Randal Milch said the lawsuit is “without merit” and that “Verizon’s actions regarding its pensions protect the interests of our retired management employees.”
According to Verizon, the monthly pension benefits of the retirees receiving an annuity from Prudential will remain unchanged. “Prudential is providing an irrevocable commitment to make all future annuity payments, and this promise will be supported by the extra protection of assets being placed in a separate account at Prudential dedicated to Verizon retirees,” Milch added.
However, the retiree association pointed out that Prudential could sell or transfer all or part of its ownership of the annuity asset to another company. The association claimed that “America's history is littered with the carcasses of many once-great and too-big-to-fail financial powerhouses such as: AIG, Kentucky Central Life Insurance Co, Executive Life, The Equitable Life Assurance Society (Equitable Life), Lehman Brothers and Bear Stearns.”
Prudential currently provides pension plan services to 3.7 million workers and retirees nationwide. Verizon’s Milch said that an independent fiduciary conducted an extensive review of the insurance market and annuity providers and selected Prudential, “with the safety and protection of pension plan participants being the sole consideration.”
Under Verizon's plan, announced in October, the pension spinoff was expected to close in December and take effect in January 2013.
The case is William Lee and Joanne McPartlin and Plan Beneficiaries of the Verizon Management Pension Plan v. Verizon Communications Inc. in the U.S. District Court for the Northern District of Texas, Dallas Division. The docket number is 3:12-CV-04834-D.
Separately, Verizon in September reached a tentative contract agreement with two unions representing 43,000 current workers, after more than a year of negotiations. Among other provisions of the agreement between the telco and the unions -- the Communications Workers of America and the International Brotherhood of Electrical Workers -- new workers will enrolled in a 401(k) retirement plan instead of a pension. The unions ratified the agreement last month.