Connecticut Public Employee Activists Fight for Pension Justice

Out of the limelight, public employee activists have achieved a near victory in their quest for a fair pension plan.  However, fulfillment of a national precedent setting grievance award to allow Connecticut state employees to transfer from a defined contribution 401(k) type retirement plan into the state’s traditional defined benefit pension system has been delayed.

On September 22, 2011 an arbiter ruled in favor of Alternate Retirement Program (ARP) members that they had been unfairly steered as new employees into their plan when the much better traditional pension plan was available.  They had not been given sufficient information to make informed choices nor had they been told that their decisions, once made, would be irrevocable.

As a remedy, the arbiter ordered that ARP members be allowed to voluntarily transfer to the pension plan using accumulations from their defined contribution plans to purchase credit for years of employment.

A rank and file organization with members in several state employee unions, the Connecticut Committee for Equity in Retirement (CCER), initiated and spurred the campaign.

On the basis of a study, it concluded that ARP members were paying over twice as much in contributions as members of the traditional pension plan yet receiving less than half the benefits; and the costs of the ARP plan were higher for the state than those of the traditional pension, contrary to widely held erroneous public opinion.

The Connecticut state employees joined West Virginia schoolteachers who won a similar victory in 2008.

Both were significant precedent-setting victories over the financial services industry which has succeeded in transforming the great majority of private sector retirement plans from secure traditional pensions to much less secure and adequate—but more profitable for itself—401(k) like stock market investment schemes and is seeking to do the same with public sector retirement plans.

The transfer was supposed to be accomplished by December 31, 2010.  However, the Retirement Commission, in violation of the terms of the Grievance Award, delayed it based on advice from a corporate law firm.  The firm alleged that an Internal Revenue Service preauthorization through a Private Letter Ruling was needed—a complicated process that could take up to two or more years.

The delay will benefit ING, a Dutch multinational financial giant and third party administrator of ARP, which collects millions of dollars in fees for each year that it maintains control of these retirement savings.

CCER is now urging their unions to contest this delay on the grounds that other states that have allowed similar transfers from defined contribution to defined benefit plans have not required IRS preauthorization.

 James W. Russell

Republished from Classism Exposed, March 22, 2011 (

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