Benefits November 8, 2004

Participant Lawsuit Brought Against Pharmaceutical and Health Care Product Producer

November 8, 2004 (PLANSPONSOR.com) - Abbott Laboratories and a spinoff, Hospira, Inc., have been sued by employees claiming that the company unlawfully interfered with their rights to receive employment benefits, according to a press release from the plaintiff's law firms.
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The violation of the Employee Retirement Income Security Act (ERISA) allegedly occurred when Abbott terminated its hospital products division (HPD) staff and spun off the division as Hospira. This prevented many long-tenured employees from garnering more benefits as they approached retirement, the suit alleged. Since the HPD staff had the most seniority of any Abbott division, the suit alleged, Abbott terminated the employees to prevent them from accruing the benefits.

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The suit charged that after the spinoff Hospira told employees that they would not be getting retiree medical benefits, and that after 2004, employees would not be able to earn additional benefits in their Abbott defined benefit plans.

Compounding the problem, according to the suit, was the fact that after the spinoff, Abbott set up a clause that made it impossible for employees to be rehired by the company within two years without missing two years worth of benefits. Hospira also set adopted a two-year policy that prevents former Abbott employees from receiving benefits while still working for Hospira.

The two law firms representing nearly 10,000 former Abbott employees, Sprenger & Lang and Meites, Mulder, Burger & Mollica, are attempting to receive class-action certification. They are also seeking reinstatement and restoration of lost benefits. The law firms are expected to garner large fees if a settlement or judgment is reached in their favor (See Lawyering Up )

Abbott and Hospira are based in Abbott Park, Illinois, and Lake Forest, Illinois, respectively. They produce and distribute health care and pharmaceutical products.

Administration November 7, 2004

EBRI: Plan Participation Among Families Is Up

July 23, 2003 (PLANSPONSOR.com) - More than four out of 10 families had a participant in an employment-based retirement plan in 2001, a level virtually unchanged from 1998's figures.
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The figures from 2001 might not indicate much of a shift in the previous three years, but going back to 1992, headway is being made on increasing participation levels.   Where in 2001, 41.6% of families were represented by participation in either a defined benefit or defined contribution plan, in 1992, this same figure was only 38.8%, according to a release of data on the Survey of Consumer Finances by the Employee Benefit Research Institute (EBRI).

In fact, the percentage of families participating only in a defined contribution plan rose to 57.7% in 2001, from 37.5% in 1992.   Conversely, only 19.5% of families had only a defined benefit plan in 2001.

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Additionally, the recent results showed 31.4% of families owned either an individual retirement account (IRA) or a Keogh plan, an increase from 28.4% in 1998 and 26.1% in 1992. Furthermore, more than half (58.6%) of families had a participant in a current or previous employer’s retirement plan or an IRA/Keogh, which is an increase from the 53.3% in 1992.

Contributions Levels

Looking at the defined contribution plan, plan balances are also on the rise – albeit the data only includes 2001’s figures, which missed a year of market declines in 2002.   Among all families with a defined contribution plan in 2001, the median plan balance was $18,000, an 81.8% increase from the 1992’s figures and a 10.2% rise since 1998. Similarly, among families with an IRA/Keogh plan, the median value of their plan was $27,000 in 2001, up 24% from 1998.

Outside of the employer-sponsored retirement plan, EBRI’s study also examined IRA holdings among families.   Not surprisingly, the most commonly owned IRA was the regular IRA, owned by 42.2% of family heads. This was followed by:

  • Rollover IRA held by 25.7%
  • Roth IRA owned by 16.4%.

However, when broken down by assets, family heads with rollover-IRAs-only moved to the top spot, accounting for 36.0% of the total assets, while the owners of regular-IRAs-only accounted for 31.3% of the assets.

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