Tuesday, June 6, 2023 | Back issues
Courthouse News Service Courthouse News Service

Union Says Alcatel Broke Pension Promises

TRENTON, N.J. (CN) - A union claims in court that French telecom Alcatel-Lucent broke its collective-bargaining agreement when it moved $1.2 billion from a labor-endorsed pension plan to another retirement fund sponsored by the company.

The money transfer essentially gives the spouses of telecom workers, who had never participated in the pension, rights to pension benefits owed to current union employees, according a lawsuit filed in New Jersey federal court by the Communications Workers of America.

The Nov. 18 complaint says that "[b]y transferring the excess assets to these plans, the company can avoid the necessity of improving their funded status with direct company contributions."

The union claims the company's actions, "effectively changed [pension plan] eligibility rules mid-contract without having bargained with CWA for such changes."

Adding urgency to the union's concerns is that Alcatel is in the process of being acquired by wireless company Nokia, which today made a $16 billion offer for the company.

Nokia announced its plans to acquire Alcatel-Lucent in April 2015. The is expected to close early next year, after which the unions will no longer have authority to question the pension transfers, the Communications Workers claim.

The union seeks declarative and injunctive relief in the form of a court order forbidding the funds transfers or the shift of pension participants between pension plans.

Alcatel has changed its pension plan several times over the years. The company's initial pension plan, created in 1966 and which provides retirement benefits to Alcatel's retired managers and vested former employees, was frozen in 2009.

The company in 1997 created another pension plan for other employees, but the plan was split at the end of 2005, thereby creating a new plan just for retirees and deferred vested employees. Included in the pension plans was a company obligation to pay all health expenses for employees who retired prior to March 1990.

As part of a 2004 labor agreement with the CWA and other unions, Alcatel agreed to maintain the pensions and health benefit guarantees through 2019.

However, on Sept. 14, 2015, the company announced it was going to shake up the pension plans. The plan, as outlined in the lawsuit, would transfer thousands of former electrical employees to the initial pension plan and 900 surviving spouses to retiree pension plan.

As a result of the shift, Alcatel planned to transfer $3 billion to the old pension plan, which was $1.2 billion more than necessary to cover the transferees' benefits. The amount transferred to cover the 900 spouses was also too large, about $26 million more than necessary, the lawsuit alleges.

Alcatel has stated it has the authority to transfer the money and that the transfers cannot be challenged by unions via arbitration. The company's third-quarter 2015 earnings report stated that it expected a pension surplus for U.S. retirees of $500 million after it made a lump-sum payment to certain plan members.

An Alcatel spokesperson could not be reached for comment.

The lawsuit also names company Chairman Philippe Camus, CEO Michel Combes, board member Jean Monty, and Director of Pension Plan Operations Susan Lear as defendants.

Alcatel-Lucent was formed in 2006 when Alcatel and AT&T spinoff company Lucent Technologies merged. Wireless company Nokia in April announced its intentions to acquire Alcatel-Lucent, which received regulatory approval, and today it commenced its share-exchange offer for $16.6 billion.

Categories: Uncategorized

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.