NU Online News Service, July 8, 2:33 p.m. – Domini Social Investments L.L.C., New York, a socially conscious money manager, says it will present a resolution that calls for AT&T Corp., New York, to change the way it handles pension benefits for veteran employees.
AT&T converted its traditional defined benefit pension plan to a cash balance system in 1997.
An employer that sponsors a traditional plan bases contributions on the assumption that an employee will spend many years participating in the plan. Contributions for senior workers are higher.
A sponsor of a cash-balance plan computes contributions on a year-to-year basis, without taking participant seniority into account.
Advocates of the cash-balance approach say it’s better for the many workers who frequently change jobs, but critics say it can shortchange older, loyal workers who started out in a plan run the traditional way.
Domini is not questioning AT&T’s right to make the conversion, but it says AT&T, like other large companies that have announced conversions, should offer veteran retirement plan members a choice of receiving benefits calculated using the traditional system or the cash-balance system.
The current approach is hurting employee morale at AT&T and opening the company up to “substantial legal liability,” Domini argues.
Domini plans to present the AT&T pension resolution Wednesday, at AT&T’s annual meeting.
Domini presented a similar resolution in 2001 that won support from 11% of the voting shares.
This year, Domini is sponsoring the resolution together with NorthStar Asset Management Inc., Blue Bell, Pa.