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Former management employees of Verizon (NYSE: VZ ) have a lawsuit in a Dallas federal court challenging the company's plan to transfer $7.5 billion of pension assets to Prudential Insurance (NYSE: PRU ) . The suit alleges violations of the Employee Retirement Income Security Act, or ERISA, which is designed to protect worker pensions.
In a press release announcing the action, C. William Jones, president of the Association BelTel Retirees, said:
On behalf of 41,000 Verizon retirees scattered across the country, who are being given no choice, no voice and no protection in the transfer of their pension assets, we are calling upon the company to reverse this action and halt this predatory business transaction that will impact many retired Americans, who labored a lifetime to fund their earned pension benefits.
At issue is income guarantees. Prudential isn't subject to the same rules that government-backed pensions are. Thus, the Association alleges, even contracted payments could be reduced or changed.
Verizon has already said that its spinoff plan includes purchasing an "irrevocable" Prudential annuity that ensures workers will be paid what they're owed.