ProtectSeniors.Org Issues Press Release on Introduction of H.R. 1322 into 111th Congress
FOR IMMEDIATE RELEASE
Why Are AIG’s Promises to Employees Sacred, While Others Are Not?
Legislation Would Make Corporate America Keep Promises Made To Workers
Recently on CBS’s ‘Face The Nation’ Lawrence H. Summers, Director of the National Economic Council, said that over $165 million in bonuses would have to be paid to AIG executives despite the company sinking because, “—we’re not a country where contracts just get abrogated willy-nilly. And if we start doing that, there would be potentially very destabilizing consequences.
Unfortunately the government seems to be selective about which agreements with employees must be kept at all costs and which can be broken at will. While Dr. Summers is defending the rights of executives of a sinking company to receive taxpayer funded bonuses, millions of retirees are seeing earned post-retirement health benefits pulled out from under them by the employers to whom they dedicated decades of service. The result will be millions of people added to the already overburdened government health care systems.
To try and stem this tide, legislation has been reintroduced into the 111th Congress that would protect millions of retirees whose post employment health benefits are at risk. The Emergency Retiree Health Benefits Protection Act (H.R. 1322) prohibits employers from making post-retirement cancellations or reductions of health benefits that retirees earned in exchange for taking a lower salary or less paid time off during their working years. The bill is being sponsored by Rep. John Tierney (D-MA), Rep. George Miller (D-CA) Chairman of the House Education and Labor Committee, and Rep. Robert Andrews (D-NJ) Chairman of the Health, Employment, Labor and Pensions Subcommittee of the House Education and Labor Committee.
“There are an estimated 18.5 million retirees and baby boomers with their health benefits being significantly threatened,” said Paul Miller, Executive Director of the national retiree group ProtectSeniors.Org. “If cancelled by the corporations they once worked for, most would be dumped into the federal and state healthcare systems. In effect this means their former employers would be getting a back door federal bail out at taxpayers’ expense.”
Despite the rantings of some radio talk show hosts and economists these benefits are not legacies but were earned by employees who agreed to sacrifice wages and paid time off while employed in return for a measure of security after they retired. Companies also benefited by the arrangement.
“Companies did not agree to pay retiree benefits out of the goodness of their hearts,” said Bill Jones, chairman of ProtectSeniors.Org. “Some companies used the promise of post-employment health care benefits to induce employees stay with the company or agree to early retirement. There were also significant financial benefits. Employers did not have to pay Social Security and payroll taxes on these benefits. Funding could be deferred in years when earnings were low, unlike a payroll which must be paid on time. Since pensions are based on a percentage of wages, companies also saved on long term pension costs.”
The proposed legislation would make it difficult for an employer to terminate retiree health benefits after an employee had retired. It would level the playing field for employees with clear, reasonable and consistent rules.
ProtectSeniors.Org is a non-profit retiree association advocating for retirees of 285 companies, 36 unions, 14 retiree associations and 76 governmental retiree groups and more than 55,000 individual retiree members.