TELCO RETIREES ASSOCIATION, INC.
To NRLN Executives:
I have taken the liberty of forwarding to each of you a copy of our
“end of the year” report to the full membership of the Telco Retirees
Since some of the items contained in this summary bear a direct
relationship to issues that have impacted your organizations, I felt you
might find our “letter” of some value.
TelCo Retirees Association, Inc.
Annual Report 2004
To Officers/Directors and Association Members:
As we close the second year of our efforts to establish an independent
retiree association of former Pacific Bell/Nevada Bell employees, I should
like to extend the personal appreciation of your Officers and Directors
for your continued support, objective criticisms and wise counsel.
The TelCo Retirees Association, Inc. began its formation in January ‘03
with the initial selection of Officers and Directors (who represent 467
years of Pacific Bell service). Initial membership applications were
placed in the mail during the first quarter of 2003. We now have in excess
of 1600 members located in 37 states and British Columbia and the United
Kingdom. Our furthest “eastern” member resides in Rhode Island.
Our federal non-profit status was formally approved by the Internal
Revenue Service on April 9, 2004. The State of California approved our
incorporation on August 12, 2004. In addition, the California State
Franchise Tax Board approved non-profit status for our Association on
September 8, 2004.
Officer/Director meetings were conducted in San Diego on March 29,
2004 and November 9, 2004. Critical issues involved increasing our
membership, securing liability insurance coverage for Officers and
Directors (tentatively approved and now awaiting documentation), updating
corporate Bylaws and selecting Publicity and Legislative Chairmen. (These
positions remain open at this writing and we are actively seeking members
who have an interest and ability to assume responsibilities for these
critical positions.) Please contact S.K. Emery, President, TelCo Retirees
Association, Inc. at
As you know, the Association filed a formal California Public Utilities
complaint against SBC on August 27, 2004 seeking compliance with tariff
schedule Cal. P.U.C. A5. At the time of this letter, the Commission has
not yet established a hearing date for this complaint. The critical issue
of this complaint involves a violation of the existing telephone
concession service tariff that impacts retirees presently living outside
of an SBC serving area. We continue to pressure the CPUC for a hearing
date on this issue.
The Officers and Directors approved a General
Membership Meeting in San Diego the second week of February, 2005.
The meeting is open to all Association members and their guests.
The issues to be reviewed and approved include the annual budget,
expansion of our retiree membership, a discussion of forthcoming quarterly
meetings throughout California, legislative issues affecting retirees and
the formal election of Officers and Directors. The announcement of
location, date and time will be made in advance of the General Membership
The Association will hold a “Quarterly” Membership
Meeting in the greater Orange County area during March 2005. While
specific invitations will go out to all members living in Orange County,
all TelCo Association members are welcome to attend any scheduled
quarterly meetings. Plans are also being developed for a quarterly
meeting in San Francisco and Sacramento. Announcements of meeting details
will be made in advance.
SBC Master Pension Trust
Because the “quality of our retirement years” continues to be
influenced by a number of factors, including state and federal
legislatures, corporations, the Federal Administration, various health
providers, Medicare, pharmaceutical companies and inflation, I felt the
following issues warranted your attention.
Dates of Divestiture
Pacific Telesis Group “Effective April 1, 1997, PTG became a wholly
owned subsidiary of SBC.”
Southern New England Telephone
“Effective October 26, 1998, SNET became a wholly owned subsidiary of
“Effective October 8, 1999, Ameritech became a wholly owned subsidiary
Pacific Telesis Group Pension Plan
Pacific Telesis Group Pension Plan funding (effective date of plan,
1984) reported the following Net Assets Available for Benefits, End of
2000 - $7,125,916,000.00
2001 - $6,131,812,000,00
2002 - $4,160,140,000.00
2003 - (Not available until first quarter ‘05)
Since benefit payments to retirees and their beneficiaries (as reported
by SBC on its annual form 5500) range between $300 and $400 million
annually, a cursory look at the assets available (above) would indicate a
serious negative trend in our Defined Pension Benefit Plan.
(During the late 90’s, two issues occurred that further impacted
pension funding.) The Pacific Telesis Group “Salaried Employees Pension
Funds” were merged with the bargained for employees’ funds.
Secondly, $300 million in our pension funds were transferred into retiree
(Effective December 1, 1992, the SBC Plan was amended to include a
medical benefit component in addition to the normal retirement benefits to
fund a portion of the postretirement obligations for retirees and
their beneficiaries in accordance with Section 401 (h) of the IRC. In
accordance with the IRC Section, the SBC Plan’s investment in the account
may not be used for, or diverted to, any purpose other than providing
health benefits for retirees and their beneficiaries. Any assets
transferred to the 401 (h) account from the Defined Benefit Pension
Plan in a qualified transfer of excess pension plan assets (and any income
allocable thereto) that are not used during the plan year must be
transferred out of the account to the pension plan. Plan participants
do not contribute to the 401 (h) account. Employer contributions or
qualified transfers to the account are determined annually and are at
the discretion of the plan sponsor.
On behalf of the pension plans, investment managers for the SBC Master
Pension Trust have purchased and written various option contracts,
which are agreements between two parties giving the owner, under a
purchased option, the right, but not the obligation, to buy (call) or sell
(put) a specified item at a fixed price (exercise or strike) during a
specified period, and under a written option the obligation but not the
right to buy or sell a specified item at a fixed price. These option
contracts are intended to economically hedge the Master Pension Trust’s
investments in foreign and domestic securities.
While SBC pension funds placed in option contracts to date have been
miniscule when compared to the other corporate retirement pension fund
investments, this program has the potential for extremely high risk. The
Quest Corporation is currently being challenged by the Association of U.S.
West retirees for the loss of $67 million when plan fiduciaries
invested in a “put option” or a “futures contract.” (The loss
occurred in a matter of weeks.)
Ad Hoc Pension Increases
For Pacific Telesis Group salaried retirees, the last ad hoc
pension increase was granted in May 2000!
While the above facts create a disquieting atmosphere for retirees in
general, the current expansion and profitability of the SBC Corporation
gives promise that future earnings will continue to grow. Further, the
recent decision of the CPUC in support of the company’s efforts to
“upgrade the (UNE-p) cost to Competitive Local Exchange Carriers was
hopeful. And, lastly, the FCC hearings on the conflict between the “Baby
Bells” and CLEC’s as it relates to “interconnection costs” may at long
last resolve this polemical issue.
Your Officers and Directors extend sincerest Holiday Greetings to you
and those you love.
Sumner K. Emery, President
TelCo Retirees Association, Inc. (Website: telcoretirees.org)