Rank-and-file pensioners struggle

back

Want to support Global Action on Aging?

Click below:

Thanks!

Rank-and-file pensioners struggle

Louise LaMuth, San Francisco Chronicle

September 22, 2002

When former President David Coulter left Bank of America in 1998 at age 51, he got parting gifts worth more than $30 million, plus a $5 million annual pension and free medical and dental benefits for life.

When Hugh McColl retired as BofA's chief executive officer in 2001, he was guaranteed a pension of about $2.4 million per year, plus other benefits.

Louise LaMuth retired from BofA in 1970 after working at the bank in San Francisco for more than 20 years. She receives a monthly pension check for $47. 57.

The gross amount is $190.83, but BofA deducts $143.26 for medical and dental benefits.

LaMuth, 88, asked a man at the bank what will happen when her health insurance, which goes up every year, exceeds her gross pension benefit, which is fixed. "He said, 'We'll just take the difference out of your checking account,' " she says.

The gap between executive and worker pensions -- which has been widening for years -- has become downright obscene.

More than $9 million per year in retirement pay wasn't enough for former General Electric CEO Jack Welch. He also got a palatial Manhattan apartment, rides on the company's Boeing 737, tickets to cultural and sporting events, and a host of other perks. Welch agreed to give some of them back last week after his wife publicized them in divorce papers.

Helen Quirini, an 82-year-old retired GE factory worker, calls those givebacks "a lot of fluff. What is he giving up?"

Quirini heads the GE Retirees Justice Fund, which works ceaselessly for higher benefits for GE retirees.

The group pickets in front of GE plants, submits shareholder resolutions at annual meetings, lobbies legislators big and small, and hustles the media.

GE has given retirees six pay increases since 1980, and Quirini's group takes partial credit for some of them.

The last raise, in 2000, raised Quirini's monthly pension $160, to $756. But she's still not satisfied.

"Jack Welch is getting $800,000 per month. Is he worth 1,000 times more than me?" she asks.

LaMuth has also been pressing BofA for a pension increase, but unlike Quirini -- who has help from several GE unions -- LaMuth has been a voice in the wilderness.

During the past five years, she has written more than 100 letters to BofA, bank regulators, legislators, lawyers and the media.

She started in 1998 after Bank of America and NationsBank -- trying to win support for their merger -- pledged $350 billion in loans for affordable housing, small businesses, consumers and economic development.

Her first batch of letters asked whether BofA could steer a bit of this "unprecedented generosity" to its own retirees, who were barely making ends meet.

LaMuth's monthly income consists of her pension, $662 in Social Security and $80 from a Treasury note.

She has been divorced since 1952 and has no children. She gets by thanks to help from a relative and San Francisco's rent-control laws. She has been living in a tidy, one-bedroom apartment on Russian Hill with a sweeping view of the bay since 1954, so her rent is way below the market rate.

Through the years, LaMuth's typewritten letters criticized Coulter's severance package, McColl's retirement benefits and the bank's charitable contributions, always asking why BofA couldn't spare a little of that largesse for retirees.

LaMuth has gotten only a few responses. In 1999, Sen. Dianne Feinstein, D- Calif., forwarded her letter to bank regulators, who forwarded it to BofA, asking the bank to respond to LaMuth.

The bank sent her a letter explaining that it was not obligated to give cost-of-living increases, although it gave several in the 1980s and one in 1996 to retirees who were at least 80. The last increase raised LaMuth's gross pension by $32.65 per month.

The letter gave three reasons why BofA couldn't give more raises. One, inflation has been low. Two, the bank has other constituents besides retirees to consider, such as customers, shareholders and current employees. Three, any increases would have to come out of bank profits.

Last year, LaMuth wrote to Kenneth Lewis, BofA's new CEO in Charlotte, N.C. That prompted a phone call from a cordial BofA representative who spent more than an hour on the phone with LaMuth, again explaining why BofA couldn't pay more.

This year, LaMuth got a response from the Pension Rights Center, an advocacy group in Washington.

The group encouraged her to band together with other BofA retirees, as the GE folks had done. But LaMuth doesn't know any retirees as desperate as she, and she doesn't have a computer, which was essential to the GE group's organizing.

So last month, LaMuth placed classified ads in the San Francisco Bay Guardian and SF Weekly, soliciting BofA retirees who think their pension is too low. Her ad in SF Weekly ran on top of one for a gay sperm bank.

The Pension Rights Center gave her a post office box for responses but so far, she hasn't received any.

Judy Apfel, project coordinator for the Pension Rights Project, an affiliated consumer group in San Francisco, says BofA is no different from most companies. Few private-sector employers guarantee cost-of-living adjustments.

Apfel says LaMuth "is suffering from her original low pay."

She joined BofA in 1941 as a teller. At that time, she says, women were openly paid less than men for the same job. When the women asked why, they were told, " 'The men are officer material,' " she says. She quit in 1944 because she couldn't get a leave to help her sister, who was having a baby in Florida. She returned about six months later, but her original employment records were lost.

She left again in 1946 when she got married. She went back in 1951 and stayed until 1970, working as a proxy administrator and as assistant building manager at 1 Van Ness. When she retired at 55, her salary was $535 per month.

After that, LaMuth worked at various art galleries. In her 60s, she became an extra in movies and got bit parts in TV commercials. "They needed some old people who weren't senile," she says.

LaMuth got several thousand dollars for appearing in a Pacific Bell Yellow Pages ad and $7,000 in residuals for a poultry commercial. She was a nun in several movies. "I made a good nun," she says.

Those jobs didn't generate much of a nest egg, and she never had a 401(k) plan, which wasn't developed until the early 1980s.

LaMuth hasn't given up her fight, but it's an uphill battle.

Many companies are struggling with their bottom lines, although BofA is doing better than many.

It earned $6.8 billion last year, down from $7.5 billion in 2000. But in the first six months of this year, it earned $4.4 billion, up from $3.9 billion in the same period last year.

At year end, its qualified pension plan had $8.26 billion in assets and $7. 61 billion in obligations, giving it a $658 million surplus.

Last year, the plan added $62 million to BofA's bottom line, says Brett Trueman, an accounting professor at UC Berkeley.

Commenting on LaMuth's situation, BofA spokesman Brad Russell says, "The formula for pension payouts is explicitly stated in materials provided to our associates. The payout, whether in the form of a lump sum or annuity, is based on an associate's account balance at retirement. The bank doesn't arbitrarily set a payment amount each year and then adjust it based on inflation."

It's hard to believe, but LaMuth's gross pension -- $190.83 per month -- is higher than average. In 2000, people 65 or older drawing a company pension were averaging $161 per month, according to the Employee Benefit Research Institute.

I asked James Klein, president of the American Benefits Council, which represents large employers, to explain why top executives should be getting exorbitant retirement packages when ordinary people are getting so little.

"You won't find me defending that," he says. "It's really two different unrelated phenomena. What companies do with respect to their top executives -- whether it's good, bad, defensible or indefensible -- is one thing. What's happening to benefit plans for everybody is another phenomenon."

Soaring health care costs for active and retired workers "are crowding out retirement benefits," he says. Health care is less controllable than pension costs "and the benefit that is more immediately sought."

Quirini, the GE retiree, says the executive-pay issue has made it easier for retirees to call attention to their plight.

"Right now it's a ripe time for these human interest stories to be put forward, to get someone in Congress to listen," she says.

Quirini says LaMuth should rally other BofA retirees, which is hard to do without e-mail and Web sites.

"I've spent at least $2,000 paying people to teach me the computer," Quirini says.

After that, "It's a combination of writing to the company and the board of directors, going to shareholder meetings and speaking up and hopefully finding someone in that group who's with you, trying to find people in your own area who are fighting this, trying to get people in newspapers and magazines to write your stories."

Retirees also get help from the Pension Rights Center (www.pensionrights.org) and the Coalition for Retirement Security (www.pensions-r-us.org), an umbrella for retiree groups.

Apfel of the Pension Rights Project says LaMuth should target legislators, not BofA.

"We can't make a change that's substantive because BofA says let's give her money. Giving her charity doesn't solve the problem," she says.

At least LaMuth still has medical coverage. Many companies are cutting or eliminating health insurance for pensioners. And that, Apfel says, can only be changed through legislation.

You can write to Louise LaMuth at P.O. Box 19821, Washington, DC 20036.