Observer-Dispatch (Utica, New York), October 12, 2006, Thursday

Copyright 2006 Observer-Dispatch (Utica, NY)
All Rights Reserved
Observer-Dispatch (Utica, New York)

October 12, 2006 Thursday
1 Edition

SECTION: MONEY; Pg. 10A

HEADLINE: Remington freezing pensions

BYLINE: Bryon Ackerman backerman@utica.gannett.com

BODY:
Increase in co-pays for medical also possible
Observer-Dispatch
ILION- A corporate-wide freeze on pension plans is in store for Remington Arms Co. workers, the company and union members said Wednesday.
The freeze for all workers will begin Jan. 1, 2008, and is a way to save money for the company, said Stu Kennedy, president of the United Mine Workers of America Local 716.
Pensions would no longer increase based on salary increases. The action will affect management, and will only affect union members if that is what is deter-mined in negotiations that begin in June 2007, union international representa-tive Dan Bass said.
About 1,000 people work at Remington Arms, Herkimer County's largest employer and one if its oldest.
Most are unionized workers. Plant Manager Joe Gross said workers hired after 1996 do not have pension plans.
Remington officials made the decision to cut back on losses because the com-pany is losing money every year, Gross said.
"I think they're doing what they have to do to be financially responsible for their future," he said.
An increase in co-pay requirements for medical plans has also been mentioned, Bass said.
"Being six or seven months away from negotiations, we expected something like this," Bass said. "They want to make more money, and it looks like they want to do it at our expense. It's a clear indication of what their intentions are going to be during negotiations."
Pension freezes are becoming increasingly common nationwide, said Jim Wooten, a professor of law at the University at Buffalo.
Many major companies including Sears Holding Corp., IBM Corp. and Verizon Communications announced pension freezes in late 2005 or early 2006.
Workers are left with 401(k) plans to manage instead of guaranteed pension, Wooten said.
"You're shifting the risk off of employers onto employees," he said.
REMINGTON ARMS Q & A
Here are answers to some questions about Remington Arms' announcement Wednes-day.
Q.: What was the announcement by the Remington Arms Co.?
A.: Pensions for all workers will be frozen beginning Jan. 1, 2008.
Q.: Who does this affect?
A.: Of the five Remington plants, only workers at the Ilion and Findlay, Ohio, plants are union members. The announcement may or may not affect union members pending negotiations to begin in June 2007. All nonunion workers- such as management- will undoubtedly be affected. About 1,200 total Remington Arms workers have pension plans. The 1,000 workers were hired after 1996 and never had pension plans.
Q.: What does the pension freeze mean?
A.: Pension plans are based on years of service to a company, age and either the three or four years of highest salary or the three highest years of salary in the past 10 years. Workers with pension plans benefit greatly from salary in-creases near the ends of their careers, but the freeze means their pension plans will no longer take any raises into account. Age will still affect the plan. Workers must retire at 65 or older to receive 100 percent of their pensions.
Q:. What recourse do workers have?
A.: All workers at Remington Arms have the option of 401(k) plans. Workers with no pension plans receive a 4 percent company match. Those with pension plans receive a smaller company match. The company match for workers with frozen pension plans will be part of the negotiations beginning in June.
Q.: Are other companies doing this? If so, why and why now?
A.: Yes. Many major companies ranging from Circuit City Stores in 2004 to Verizon Communications in 2005 and IBM Corp. in 2006, have announced pension freezes. Reasons for the freezes include international competition, rising healthcare costs and rising and volatile financial costs. A rule announced Sept. 29 by the Financial Accounting Standards Board might soon affect companies by making them more directly report assets and liabilities on financial sheets.
Sources: Jim Wooten, professor of law at the University at Buffalo; Ronald G. Ehrenberg, professor of industrial and labor relations at Cornell University; Stu Kennedy, president of the United Mine Workers of America Local 716; Dan Bass, international representative for the United Mine Workers of America; Joe Gross, plant manager of the Ilion Remington Arms; Center for Retirement Research at Boston College report