The 457b’s dirty little secret is that “IT CAN BE USED AS ASSETS BY THE COMPANY”

 (written by a union member)

Brothers and Sisters,

I write this in regards of something I seen just recently, concerning our future aspects at the negotiating table and beyond. While most members and leadership are concerned with other aspects of the “total” give-backs, such as left turns with the 30-31 series busses or the journeyman certifications (which are all very important), I have been focused on the “golden ticket” for them which is the Benefits and retirement for union members. This is where they are going to go after the “big” money in their $100 million dollars in take-always.

Since the company “easily” won both the Arbitration and the ERB, I thought “what’s next.” Well, I’ll tell you it has been right in front of our faces, “new hires defined contribution plan(s).” After the major loss in the arbitration, the “status quo” had changed to defined contribution from defined benefits. The company established the 401a plan for those hired after the loss, allowed new hires to contribute into a fund for their future retirements; that should have been the end of the story, but it wasn’t. When the ERB “affirmed” the change in status quo, which allowed the company to change the new hire plan from a, 401a plan to a 457b plan.

I thought, why the change; what is better 401a or a 457b? Looking at the various plans and talking to others, you would think that the 457b would be the better plan. Other’s debates are that the plan can be changed at any time (which is great); unlike the 401a that can only be done at the beginning of employment (which is not good). My argument was who controls the ability to change the 401a plan, say after a member reaches the top salary, the answer: management (not good). The answer is the 401a plan by far is the better plan (which is now only offered to non-union employees), due to the fact that the employee controls the destiny of the plan. The 457b’s dirty little secret is that “IT CAN BE USED AS ASSETS BY THE COMPANY” (see attached, plan evaluations).

So say, hypothetically the company starts on a massive hunt for new hires for all union positions. Get them all hooked up with this plan; then get rid of those who do not fall under the 457b (all members who are not vested, in the defined benefit category). Build this pot that was retroactive because of ERB (easy win); take those who still have the 401a and make them put that money into the 457b. Then you add all this up into a nice Strategic Financial Plan ending in 2035 (http://trimet.org/pdfs/sfp/TriMet-Strategic-Financial-Plan-Draft.pdf).  In the Plan, the company takes a dramatic uptick in resources in 2016-2020 at the same time in 2020 the pension fund takes a direct hit in lowered obligations; doing the math, that’s at least 2 contracts with the union, that they expect to win; all the while cutting benefits to “none.”  “Pure genius, if you have no soul and care nothing for others.”  Now say hypothetically, the company has all this money by 2035 (described as pension and OPEB obligations) and they have completed the projects that date back to the prior GM (Max proposals and other projects pushed by Fred Hanson back in 2007 culminating with the completion of the Orange line and CRC: http://www.trimet.org/pdfs/publications/community_sourcebook.pdf) and are ready for the next project, well what has been discussed at the Board meetings was getting the Tigard Max line going “in” 2035 (Potential prospects, in the future? http://blog.oregonlive.com/news_impact/2009/04/rail.jpg).  Since the company has a history of using the pension (on the union-side) funds as liquid (Pension funds like ATMs by John Charles Published on Mar 29, 2013 https://www.youtube.com/watch?v=ijBLWNDn99w) assets, they would be able to continue robbing members of their pensions yet again.  On a different note, I must say that John Charles is the “only” one who has brought up the company’s continuing use of the union pension funds, whereas the union has “never” challenged the company on this point; not that I’m aware of.

Lastly, I want to point out that in the next and any subsequent contract talks, there needs to be discussion on protecting the pensions from theft.  There is a guideline in place that covers protections on pensions it is called ERISA (http://en.wikipedia.org/wiki/ERISA).  Although this law only covers the private industry, I think I could be used as a guideline for protecting our retirements going forward.  Also there has been some litigation on companies that have robbed the 457b out there (Class action against a company using the 457b money for other purposes: http://www.wilmington.will.k12.il.us/teacher/notice%20of%20class%20action%20lawsuit.pdf and the outcome of the case http://www.gatekeepersettlement.com/Documents/GKB0001/Stipulated%20Class%20Action%20Settlement%20Agreement%20[signed].pdf) and have paid the price; this company will be no different.  We must protect ourselves from the constant “war on workers.”

What Is the Difference Between 401(a) and 457 Retirement Plans?

http://www.ehow.com/info_7753779_difference-401a-457-retirement-plans.html

Plan Comparison Chart

http://www1.tiaa-cref.org/plansponsors/resources/retirement-plans/comparison/index.html

The 457(b) plan says this:  Once invested, funds become assets of the employer and subject to employer's creditors.

Clearly, the 401(a) plan is the better, due to the fact that the moneys invested are “not” assets of the company, to be taken without compensation to the employee.

More opinions:

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=99065

The laws of rollovers:

http://www.oregonlaws.org/ors/238A.430