Pension takeovers slash benefits
Bethlehem Steel experience illustrates trend as struggling firms seek federal relief
By Maryclaire Dale, Associated Press
St Paul Pioneer Press
Monday, May 16, 2005
PHILADELPHIA — After 33 years on the job, crane operator James Roberts retired from Bethlehem Steel in 2000 with a monthly pension of about $1,875 and free health care.
Within three years he lost much of that cushion for the future, when the bankrupt steel maker was allowed to hand off its pension obligations to a federally funded program that insures pensions. The pension check shrank to about $1,250, and he lost health and life benefits.
Roberts had retired early, at 54, after a year off with a degenerative bone disease. He was suddenly stuck with less income and with monthly bills of about $200 for insurance premiums and $400 for prescription medications.
His plight is shared not just with many other former Bethlehem Steel workers but by a growing number of retirees from companies that are collapsing and turning their pension programs over to the underfunded Pension Benefit Guaranty Corp.
Some 120,000 workers and retirees of United Airlines are joining those ranks. A judge last week approved the transfer of its pension obligations to the PBGC.
In affected households across the country, painful adjustments are being made in both expectations and daily routines.
For Roberts, the original pension check "was money I could use for food or I could use for entertainment or I could use to help my kids who are in school." The youngest of his five children is still in college.
To make ends meet, he now works part-time in a school cafeteria, earning $7.65 an hour. Because of his bone condition, he ends each shift exhausted.
"After I complete those few hours, I'm down for the day," he said.
Roberts is now 57 and has years to go before he's eligible for Medicare, although he recently qualified for a low-cost prescription plan.
He said he often worked six long days, or nights, at the Steelton, Pa., plant and was earning about $50,000 a year when he retired.
The job "was not a bad thing. It served me well," he said. "But the promises were not kept. That makes me angry, because we gave up things in order to get those promises … and the company did not hold its end of the bargain."
While some Bethlehem Steel retirees saw little or no change in their pension, others — especially younger retirees like Roberts — were hit hard.
Under the plan, a 65-year-old retiree has a maximum pension of about $45,600 a year, fund spokesman Gary Pastorius said. But a 70-year-old retiree can receive up to $75,700 and a 75-year-old up to $138,700.
Bruce Davis, 73, a retired corporate spokesman for Bethlehem Steel, started an advocacy group to help white-collar retirees not represented by the United Steelworkers of America.
Davis estimates that only about 10 percent of 75,000 white-collar retirees saw their pension drop after the takeover, because Bethlehem Steel had an older work force. United's work force may be younger, and Davis believes those pilots, flight attendants and mechanics in their mid-50s should expect a big drop in benefits.
His group's members worry about the added strain that United retirees would put on the fund.
"There's not going to be money there to pay people's pensions. There's going to be pandemonium," said Betty Strangarity, a retired benefits coordinator who lives in Steelton, home of the large Bethlehem Steel plant in which she and Roberts worked.
Strangarity's budget shrank by about $1,500 a month after the pension takeover, including the cost of health and life insurance for herself and her husband. They are getting by, albeit with fewer vacations and niceties, she said.
She said she has friends in the former steel town who are seriously strapped. Some widows were already living on pensions — set when their husbands died decades ago — of just a few hundred dollars a month, and then lost the company-paid health insurance, she said.
"You just can't cut people off in their 80s and 70s," said Strangarity, who faults government for a lack of pension oversight. "They had their lives structured for that amount of money, then it's pulled out."
Some have to give up their homes, unable to keep pace with rising property taxes and other costs, she said.
"It has a very big impact on their families, on the town, and on the county," Strangarity said