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September 15, 2004
The Honorable Elaine L. Chao Secretary of Labor U.S. Department of Labor 200 Constitution Avenue, N.W. Washington, DC 20210
Dear Madam Secretary:
Recently members of my staff met with representatives of the Lucent Retiree Organization (LRO), an organization of Lucent Technologies retirees dedicated to protecting and enhancing the pension, healthcare and other retirement benefits earned by Lucent employees over a lifetime of service. In essence, the LRO embodies the determination of men and women in their “golden years” who will not let happen to them what happened to the retirees of companies which defaulted on their committed pensions and other earned benefits.
In light of Lucent Technologies efforts to cut back retiree health care benefits and an article published in the Wall Street Journal on March 29, 2004, that purported to show: (1) How Lucent has been able to use assets from pension and benefit trust funds to help it pay for repeated rounds of downsizing; (2) How Lucent received hundreds of millions of dollars of income from the pension and benefit trust funds; (3) How through a separate accounting maneuver, the cuts that Lucent made in the benefit plans last fall will contribute hundreds of millions of dollars more in income over future years, and; (4) How in most years the pension and retiree benefit plans have enhanced Lucent’s earnings, not burdened them. The membership of LRO has become extremely concerned the Lucent Pension Trust Fund has not been prudently and properly managed and is, in fact, in possible danger of financial collapse.
Clearly these are very serious allegations. I understand that Lucent Technologies’ senior management has attempted to reassure all Lucent retirees and their dependents that their pensions are secure. Unfortunately, reports from the Securities and Exchange Commission (SEC) that it levied a $25 million penalty against Lucent for lack of cooperation in an SEC investigation of securities fraud charges have undermined retirees’ confidence in these assurances. The Honorable Elaine L. Chao Page 2
Madam Secretary, Lucent retirees’ deferred full compensation over their working years to pay for these retirement benefits. These monies are not gifts from the company but benefits earned through a lifetime of hard work and sacrifice. Like Social Security, these pension benefits belong to these men and women and they have a right to know they will be returned to them as promised. In addition, the financial stability of the Federal Pension Benefit Guaranty Corporation (PBGC) is already in question, with some estimates indicating that the PBGC already has an operating deficit of over $11 billion, while at the same time facing the very real possibility it may have to assume the airline industry’s nearly $30 billion in pension liabilities. Under the circumstances, a pension default by Lucent would be devastating for Lucent retires and the American taxpayer.
Therefore, I would respectfully ask you to work with Lucent Technologies and the Lucent Retiree Organization to clear any air of uncertainty surrounding the stability of the Lucent pension fund, and reassure both Lucent retirees and the American taxpayer that the plan has sufficient assets to guarantee payment of promised benefits in the event of a corporate default or failure.
Sincerely,
Dan Burton Member of Congress |