Word: settlements
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...injustice is not in the amount of the termination settlement, but in the method of payment; i.e., a lump sum payment which imposes on the employee an immediate, up-front, 40% tax liability...
...problem came to my attention when a fellow church member, a woman age 61, who was a staff employee of Harvard, came to me for financial advice, as I am treasurer of her church. She was being forced to take early retirement and had been offered a lump sum settlement of approximately $100,000, of which she would be obliged to make an immediate payment of 40% in taxes, leaving roughly $60,000. I prepared for her a proposal for a 10-year payout that would more than double the value to her at no added cost to Harvard, except...
...Price's response, in which she characterized a negotiated termination settlement for an employee forced to take early retirement as a "retirement plan" was, in my opinion, disingenuous. Prior to my suggesting the 10-year payout plan, I had discussed with Phil Lima of the Benefits Administration the procedure followed in arriving at termination settlements. I specifically asked if multi-year payouts were permissible. His reply was that "FAS could strike any deal it wanted" and he went on to point out that negotiated settlements do not involve the use of restricted pension funds...
...least there was one argument in support of the lump sum policy that, fortunately, Human Resources did not make; namely, that since 60% of the settlement was the full amount that Human Resources felt the retiree was entitled to, why should there be an outcry if the remaining 40% went to the IRS. That would be a specious and cynical argument. Harvard's proposed settlement, even including the 40% to the IRS, fell far short of making up my friend's lost retirement income. Hence, it us obviously in the interest of both Harvard and the retirees that the funds...
...know, salaried employees have neither the tenure protection of faculty members nor the union protection available to hourly workers. My friend was therefore compelled to accept the offer of a lump sum payment, and has promised to sign a release stating that she will not contest the settlement. Her case, as far as I am concerned, is closed. My effort now is not directed at redressing the injustice done to her, but on seeking public opinion support to persuade Harvard, for the benefit of other employees in a like situation, to revise its restrictive policy on method of payment, which...