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Laid-Off Ford Managers Set Back on Bid for Higher Pension Payouts

Federal judge rules that they must use arbitration, instead of the courts, to seek redress.
By Larry Light


Two former Ford Motor managers, who claim they were unjustly deprived of higher pension payments after losing their jobs, can’t go to court and must contest their treatment in arbitration.

The two men, Werner Woellecke and Terry Haggerty, who are part of a class action lawsuit against the automaker, must abide by a clause in their severance agreement that commits them to arbitration. While US District Judge Bernard A. Friedman noted that some of their claims could merit going to court, he ruled that must be decided by the arbitrator.  

Woellecke and Haggerty were laid off last year, just before they would have reached 30 years with the company—and thus forfeited the higher pension benefits. People with beefs against corporations often prefer lawsuits, thinking that arbitration favors the companies. The duo’s departure was part of Ford’s firing 7,000 salaried employees, which was a tenth of its workforce then.

In their lawsuit, they claimed that Ford “fraudulently induced” them to sign a claims waiver in exchange for severance payments, and that the company hid from them their eligibility for the fatter pension payouts.

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Woellecke, for instance, is entitled to a total payout of around $500,000. If he had been granted more time, his lump sum would be more than $1.2 million.

The class action suit contends that the company indulged in age discrimination to cull out older, higher-salaried white-collar employees, and aimed to prevent them from reaching the 30-year mark, or age 55, which would bring them the higher pensions.

Ford did not reply to a request for comment, not did the men’s lawyer.

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Home > News > Asset Allocation > Expect More Inflation Ahead, but Not 1970s Levels, BlackRock Says
Asset Allocation

Expect More Inflation Ahead, but Not 1970s Levels, BlackRock Says

Asset management titan thinks pandemic stimulus and new Fed tolerance should lead to increases in the 2.5% range.
By Larry Light


Inflation remains tame, well below the 2% target that the Federal Reserve thinks is a good place to keep the gears of commerce spinning easily. But BlackRock, the world’s largest asset manager, forecasts that it will bust past that long-unmet goal next year.

“This won’t be the 1970s,” the era of hyper-inflation, said Simona Paravani-Mellinghoff, global CIO of solutions, multi-asset strategies and solutions at the firm, in a webcast. She sees it rising to around 2.5%. “The market expects it to be below 2%.”

The reasons for the rise: All the government spending and Federal Reserve stimulus that have been thrown at bolstering the pandemic-battered economy, and the Fed’s expressed willingness to let inflation drift north of 2% for a time before acting to contain it. “Markets understate inflation,” Paravani-Mellinghoff said.

As a result, BlackRock is underweighting most government debt, but overweighting inflation-protected debt, the firm said in its recent Global Outlook. It noted that there are some signs of possible inflation, presumably including a wider yield curve, the difference between the two-year and 10-year Treasury notes. The real yield (after inflation) of Treasury inflation-protected securities (TIPS) has risen, but it still is on the low side, to say the least (minus 0.85%).

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The Federal Reserve has made a point of saying that it won’t tolerate inflation straying far above 2% for long, triggering higher bond yields. “Central banks have indicated they stand ready to cap any rise in government bond yields,” the BlackRock document read.

The Consumer Price Index (CPI) was just 1.2% over the past 12 months, continuing a trend for modest inflation that has gone on for many years now. Many think that won’t change, although voices like the Financial Forecast Center disagree: By next June, it predicts a 2.66% reading.

That’s a long way from the double-digit inflation of the 1970s and early 1980s. The CPI peaked at 14% in 1980, before Federal Reserve Chair Paul Volcker cracked down with punishing interest rate hikes that finally squelched the seemingly inexorable price spiral.

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