MTA retirees angry over federal pension fund law

PALMER — On the day he was supposed to retire, longtime Matanuska Telephone Association lineman Jim Haugom thought the local cooperative’s executives were joking when they informed him he couldn’t get his pension fund in one lump sum.

“I started there 30 years ago and I don’t find out I can’t get all my funds until my last day? Are you kidding me?” Haugom said July 11 when asked his feelings about MTA’s inability to give its most highly compensated employees their retirement in a lump sum payment. “They told me I was in their top 25 and that meant I couldn’t get the money all at once. So I stayed one more year, hoping it would get taken care of, but it didn’t.”

Haugom, several other MTA retirees, former board director Chuck Foster and one current employee are speaking out against a post-Enron federal law that prevents companies from distributing pensions in lump sums to the top 25 highest compensated employees. They said they believe MTA could do more to ensure its employees’ pensions are not left under-funded in their golden years.

First passed in 1974, the Employee Retirement Income Security Act (ERISA) was initially created as an employee protection law after the Studebaker Motor Co. went bankrupt many years before, leaving pension funds unprotected, ERISA law attorney Ron Dean says on his legal website, law.freeadvice.com.

“Originally enacted as an employee protection law, experts say that ERISA sometimes does just the opposite,” Dean says. “Some say the real purpose was to address alleged mob interests in the Teamsters’ pension funds.”

When Enron and WorldCom executives resigned from their companies shortly before their collapse and made off with millions in pension funds — leaving their subordinates with nothing — the provision was added to ERISA to prevent a repeat.

While the reasons for the law seem straight forward, MTA employees and others are having trouble wrapping their heads around why it pertains to smaller companies and organizations that wouldn’t be so adversely affected by pension payouts because their top wage earners wouldn’t be walking away with more than $1 million.

“It’s not like we would be breaking the bank,” Haugom said.

They said they don’t understand why MTA’s pension fund account is only 69 percent funded. They also wonder how more than 100 employees have made the member-owned co-op’s Top 25 wage earners.

“I didn’t even know I was on the list. They don’t tell you,” said Haugom, a father of six. “We did a lot of overtime and got paid really well. It seems like we’re being punished for that now. They kept telling us we were valued members of the MTA family, but they don’t seem to be fighting for us. And it’s affecting the top executives, too. You’d think they’d be trying to change the law, too.”

MTA Chief Executive Officer Greg Berberich said MTA’s hands are tied by ERISA requirements. And as such, employees owed more than $600,000 in retirement can only get their pensions through monthly annuity payments.

“They may wait until the restriction no longer applies and then receive a lump sum. Again, this is a federally mandated restriction,” Berberich said. “These are not restrictions imposed unilaterally by MTA. We have been very proactive in explaining these restrictions to all affected employees. MTA certainly has compassion for those individuals impacted by these rules and continues to work with retirees to accommodate their situations to the maximum extent available under these laws.”

For Foster and some retirees, that explanation isn’t good enough.

“When I got on the board I raised all kinds of cane about it,” Foster said. “We finally sent a letter to the IRS and I went to D.C. to lobby our delegation, but so far nothing’s changed. I’m guessing MTA’s pension fund is about $16 million in the hole now, so why can’t MTA put money into it and take care of its liability? Greg (Berberich) has total authority over it. He should take the money being spent on other things and cash out employees. That would be the honorable thing. Give employees the retirement they were promised 30 years ago.”

According to MTA’s annual funding notice supplied to the Frontiersman by a current longtime employee who is nearing retirement, the pension plan was funded 92.2 percent in 2008, but dropped to 69.4 percent for 2010.

Total plan assets were $49.8 million in 2008 and $41.9 million in 2010. Total plan liabilities were $53.3 million in 2008 and $60.4 million in 2010.

To make matters worse, in order for the highest-paid employees to be paid their full monthly annuity payments, the pension account must be at least 80 percent funded. Until then, many retirees will receive only about half of what is owed to them each month.

“In 2008, they paid an extra $664,060 and in 2009 it was down to $444,854, meaning that the $220,000 disappeared or was applied to the minimum required payments,” the wife of the current longtime employee said under the condition they not be identified. “Then in 2010, there is no carryover, meaning once again the $444,854 (that) disappeared was used for the minimum required payments. So if you do the math and take the assets and subtract the liabilities there is a deficit of $18,476,812. So it is our opinion as well as that of many of the employees that they have not funded millions extra, but shuffled money.”

She said her husband has worked for MTA for 25 years and had planned to take a lump sum upon retirement because he’s been experiencing health issues.

“We disagree with him being in the top 25. He was only in that category one year when he had a lot of overtime,” she said. “It appears to be a way to discourage and disallow the employees that have been there for years and worked all the overtime requested or required by MTA to take the lump sum and make them take an annuity.”

Retiree Bill Franklin said that while he understands employees’ frustrations, the matter is very complicated. He believes the ERISA law needs to be changed.

Efforts to reach Alaska’s representatives in Washington, D.C., this past week were not successful.

“My retirement comes in monthly and will run out when I’m 81,” said Franklin, a former MTA finance manager and IT director who retired after 23 years in January of 2006 — right after the new Top 25 provisions kicked in in 2005. “That doesn’t make me happy, but if I’m going to direct my anger at anyone, it has to be against the United States government and ERISA law.”

Contact K.T. McKee at kate.mckee@frontiersman.com or 352-2252.