State Sen. Tony Avella (D-Bayside) was joined Monday by several retirees at a press conference announcing legislation that he will be introducing that would protect existing retirees whose pensions were sold off without advance notice via a method called “pension de-risking,” which is also known as pension stripping.
Pension stripping occurs when a company sells the pensions of its retirees, usually to an insurance company without the retirees’ permission. This has the effect of converting them into annuities, causing the retirees to lose federal Employee Retirement Income Security Act protections and federal Pension Benefit Guaranty Corp. insurance coverage. The practice removes the financial risk for corporations, but it transfers the burden onto the pensioners.
This legislation would mandate that the state put in place pension protection mechanisms provided before the pensions were transferred.
“Retirees depend on their hard-earned pensions and when companies go through the process of pension stripping, they are playing a risky game with a retiree’s pension,” Avella said.