Compliance June 14, 2005

US Senators Demand PBGC Underfunding Data

June 14, 2005 (PLANSPONSOR.com) - Two key US Senators have asked the Pension Benefit Guaranty Corporation (PBGC) for more information about hundreds of underfunded pension plans, which the lawmakers say they need to help craft pension reform measures.
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>Senator Charles Grassley (R-Iowa) and Senator Max Baucus (D-Montana), chairman and ranking minority member respectively of the Senate Finance Committee, said they are seeking more information about the health of defined benefit plans as reported to the PBGC in 2003 and 2004, according to a Reuters report. The PBGC insures the nation’s private-sector pension plans.

“You can’t fix a problem until you understand it,” Grassley said in the joint statement with Baucus, according to Reuters. “Unfortunately, we often don’t hear about a pension fund’s collapse until it’s too late…. Getting information about the companies with the worst problems will inform our work.”

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>US House Education and Workforce Committee Chairman Representative John Boehner (R-Ohio) and the panel’s ranking Democrat, Representative George Miller ofCalifornia, made a similar request of the PBGC in April. They asked for information about pension plans that are 75% funded or less.

>Boehner introduced a pension reform plan in the House last week requiring companies to fully fund their pensions in seven years and pay higher insurance premiums to the PBGC, which has a $23.3 billion deficit (See    Latest GOP Pension Reform Bill Includes Advice ).

>Miller said last week that when he reviewed the confidential data from the PBGC about underfunded pensions, it was dramatic compared to statements companies make about their pensions in annual reports to the Securities and Exchange Commission (SEC). Some companies, Miller said, were making public reports that were “billions of dollars” more optimistic about the pension funds than their confidential reports to the PBGC.

>The PBGC’s Director Bradley Belt testified last week that in 2004, there were 1,108 pension plans that were underfunded by $353.7 billion, a 27% increase over the previous year (See    PBGC: Underfunding Totals Skyrocket 27% in 2004 ). The auto sector accounted for at least $55 billion of plan underfunding and airlines more than $30 billion, Belt said.

Benefits June 13, 2005

Judge Clears Path for Law Firm Age Discrimination Suit

June 13, 2005 (PLANSPONSOR.com) - A federal judge has cleared the way for the federal agency that enforces workplace discrimination laws to move forward with its age discrimination lawsuit against a large Chicago law firm.
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The US Equal Employment Opportunity Commission (EEOC) announced in a Web statement that US District Judge James Zagel of the US District Court for the Northern District of Illinois had rejected requests by the Sidley & Austin firm to throw out the case. The firm argued that the EEOC’s lawsuit couldn’t proceed because none of the lawyers involved in the claim had filed an agency complaint that they had been discriminated against because of their age.

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The agency charged in its January 2005 suit that Sidley violated the Age Discrimination in Employment Act (ADEA) by downgrading a group of law firm partners to “senior counsel” or “counsel” status in the fall of 1999 and by maintaining a mandatory retirement age for partners (See EEOC Alleges Partner Age Discrimination at Giant Law Firm ). EEOC is seeking money damages and reinstatement for these partners.

In a written ruling, Zagel said the EEOC had broader authority to seek redress of potential discrimination beyond that affecting an individual complaining party. Relying on Supreme Court precedent, Zagel, wrote: “The EEOC’s right to bring suit seeking individual relief goes beyond that of the individual and reaches the territory of public interest, thereby allowing EEOC to seek relief for individuals, like the affected Sidley partners in this case, who could not, for any variety of reasons, do so themselves.”

According to the agency’s statement, its Chicago District Office began its investigation after Sidley & Austin made statements to the news media that it had demoted partners to create opportunity for younger lawyers, reports which also mentioned its mandatory retirement age.

A Sidley statement quoted by Crains Chicago Business says the firm will continue to defend its employment practices in court. “We did not and do not make decisions about our lawyers and staff based on age,” the statement asserted.

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