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May 23, 2002
Congressman Wants Reprimands for 13 ERISA Violators
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The employers had converted traditional retirement plans to cash-balance plans, resulting in a shortfall of $17 million in lump-sum payouts to hundreds of workers who left the firms early, according to the Boston Globe.
"We found that these companies did not use the interest rates they are legally required to use when projecting pension benefits to employees," said the congressman, Bernard Sanders, an independent from Vermont. "The result is that workers who left these companies early were paid substantially less than they should have been paid."
The companies' practices came to light after the Labor Department conducted an audit of 60 companies around the country and found that 13, or 22 percent, had not paid all the accrued benefits legally due some early retirees. The underpayments occurred because of errors in projecting and discounting benefits, and in calculating opening balances, annuity conversion factors, and cost-of-living adjustments.
Among the 13 companies named in the audit report by the Labor Department's Office of the Inspector General were three New England firms: Markem Corp. in Keene, N.H.; First Allmerica Financial Life Insurance Co. in Worcester; and Asea Brown Boveri Inc. in Norwalk, Conn.
The other 10 firms found to be in violation of pension laws are: BOC Group Inc. of New Providence, N.J.; Steele Heddle Manufacturing Co. of Greenville, S.C.; Wake Medical Center in Raleigh, N.C.; Accuride Corp. of Henderson, Ky.; Formosa Plastics Corp. of Livingston, N.J.; Chesapeake Directory Sales Co. of Greenbelt, Md.; Amoco Fabrics & Fibers Co. of Atlanta; Robbins and Myers Inc. of Dayton, Ohio; Burns and Roe Enterprises Inc. of Oradell, N.J.; and General Atomics of San Diego.
Sanders is expected to file legislation, cosponsored by US Representatives Maurice Hinchey, Democrat of New York, and Gil Gutknecht, Republican of Minnesota, that would either seek fines against the 13 firms and others found to be in violation of the law, or require that workers be reimbursed.
The bill also would require that the Labor Department and Internal Revenue Service create guidelines to assist corporate administrators in calculating retirement benefits. Additionally, it would seek to increase enforcement of federal pension laws that govern cash-balance and traditional defined benefits plans.
To view the Boston Globe article, click here.
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