Posted on 02/09/2003 3:24:34 PM PST by RCW2001
DAVID B. CARUSO, Associated Press Writer
Sunday, February 9, 2003
©2003 Associated Press
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2003/02/09/financial1618EST0019.DTL
(02-09) 14:10 PST BETHLEHEM, Pa. (AP) --
Some of them went to work in the blast furnaces when they were just 18, then spent half a lifetime handling molten slag and inhaling steel dust in some of the most dangerous jobs on earth.
But for the tens of thousands of Bethlehem Steel workers who stuck it out, retirement brought a rich reward: A hefty pension and a lifetime of almost free health care for themselves and their families.
"It was capitalism's version of socialized medicine," said James Van Vliet, a retired Bethlehem Steel vice president. "And it was an implied contract. It was the company and the workers saying, `We are going to take care of each other."'
It may go down in history as a promise unfulfilled.
Bankrupt and only a shadow of its former might, Bethlehem Steel on Friday announced it was seeking bankruptcy court approval to terminate health and life insurance benefits for 95,000 retired workers March 31.
It was seen as essential to the company's bid to sell its assets to International Steel Group, and followed news in December that Bethlehem Steel's pension plan was underfunded by $3.2 billion and would be turned over to a government agency.
Both were expected. The American steel industry has been in decline for decades, and most of its former giants have been trimming pensions and benefits for retirees for years. Moreover, corporate America largely has shifted the responsibility of old-age provisioning to workers, with self-funded plans such as 401(k) accounts.
But the one-two punch is still a staggering blow for a generation that had been promised a lifetime of comforts in return for a career spent at one company. Now, some are facing the prospect of seeing their monthly $6 payments for health insurance jump to between $200 and $300.
"That's a lot to swallow," said Len Christman, 67, who worked 39 years at Bethlehem Steel's sprawling plant in Bethlehem, about 40 miles north of Philadelphia. "It's a very tough position to be in at this stage in life."
Nearly all retirees will still get some benefits. Pension payments, being taken over by the Pension Benefit Guarantee Corp., are expected to continue at about 90 percent of their former level. For workers over 65, the federal Medicare program will pick up some health care costs.
But Medicare, which covers hospital visits but doesn't pay for medications, won't come close to covering all the health-related costs of many retired steel workers.
Joe Pancoe, who worked for Bethlehem Steel for 31 years with spray paint and asbestos, said that at 81, he has asthma and a hacking cough, and uses a slew of pills and inhalers to soothe his battered lungs.
"We, the old timers, were part of the industrial revolution. And now, we are part of the medical revolution. We have the emphysemas, we have the cancers. We have everything," he said.
Almost all workers agree Bethlehem Steel is in little position to help. When it declared bankruptcy in October 2001, the company had about 12,000 employees, down from more than 300,000 during World War II. Most factories have been closed.
On Saturday, Bethlehem's board approved the sale of the company's assets to International Steel Group, a new steel producer cobbled together by financier Wilbur Ross from other distressed steel mills. The deal is subject to approval by the bankruptcy court.
Bruce Davis, a retired Bethlehem Steel lawyer who serves as legal counsel for the Retired Employees Benefit Coalition, said several labor groups are negotiating to extend health-care benefits, at least temporarily.
The coalition has asked the company to continue health benefits through May, rather than March. It also anticipates that it will be able to offer retirees a replacement health insurance package similar to ones offered at other bankrupt steel companies.
©2003 Associated Press
FREE thats funny I thought it was part of a contract as wages earned...BIOYA
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Government Pension Program Has Shortfall
Government Pension Insurance Program Racks Up $3.6 Billion Record Shortfall
The Associated Press
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| WASHINGTON Jan. 30 — The government program protecting workers' retirement income earned in private employer-sponsored pension plans posted a record $3.6 billion shortfall in 2002 after burning through its entire $7.7 billion surplus last year. The Pension Benefit Guaranty Corp. said Thursday that the bulk of that $11.4 billion net loss last year also the largest in the agency's 28-year history was from securing a record number of underfunded pension plans at bankrupt and financially troubled companies, particularly in the steel industry. The PBGC's executive director, Steven A. Kandarian, said the insurance program still had sufficient assets to pay benefits to retirees "for a number of years." But officials must find new ways to financially strengthen the program to meet future obligations, he said. About 80 percent, or $9.3 billion, of the $11.4 billion net loss was because of underfunded single-employer plans. Declining interest rates accounted for nearly $1.7 billion of the loss. The PBGC's last deficit was in 1995, at $315 million. The only surpluses it has recorded were in 1996 through 2001. Two key lawmakers said they intend to examine the financial troubles at the agency. Rep. John Boehner, R-Ohio, chairman of the Education and Workforce Committee, and Rep. Sam Johnson, R-Texas, a subcommittee chairman, said a hearing will be held in the spring. The hearing will "examine both the challenges facing the PBGC and the mandated funding formulas used by corporations and unions to determine if any challenges need to be made in order to better protect American workers," Johnson said. The PBGC was created in 1974 to guarantee payment of basic pension benefits. About 44 million American workers and retirees currently have pensions under PBGC control. The agency is financed by insurance premiums paid by companies that sponsor pension plans and by PBGC's investment returns. A Treasury official said the financial report "is a wake-up call, reminding us of the work we need to do now so that retirees continue to receive in coming years the pension benefits they have earned," said Peter Fisher, treasury undersecretary for domestic finance who also sits on PBGC's board of directors. He said officials need to carefully select a permanent replacement for the 30-year bond as the rate for valuing pension liabilities. A higher rate, for example, would diminish liabilities. Other ideas being considered are a hike in employer premiums, tightening funding requirements for pensions and imposing restrictions on benefit increases in underfunded plans. The PBGC last year had its largest pension takeover ever when it insured the underfunded pension plans of LTV Corp. for $1.85 billion. The steel industry accounted for almost 80 percent of the underfunded plans in 2002. Already this year, the PBGC has moved to take over the pension plans of National Steel and Bethlehem Steel, which together account for $5.16 billion and are not included in 2002 financial numbers. The agency assumed control over 144 pension plans covering 187,000 people last year, up from 104 plans and 89,00 participants in 2001 a record increase. Also, the PBGC paid a record $1.5 billion in benefits, nearly 50 percent higher than 2001. Separately, the PBGC's multi-employer program, covering 9.5 million participants in 1,661 plans, remained financially strong in 2002. It had a surplus if $158 million, up from $116 million in 2001. |
The applicable alphabet soup is ERISA. Congress once took upon itself to guarantee pension benefits to workers the same way it guaranteed back deposits. The company is liable to the fund only to the extent of 1/3 of its net worth, which in Bessie's case is about zero.
Other, smaller companies that were not backrupt have opted to default and pay over 1/3 of their net worth to get out of all pension obligations. This has already happened and is now an accepted option to resolve pension plans that get too expensive. It is the kind of nonsense that comes out of government give aways that are not well thought out.
I think today's workers will be better off, because they have the financial tools to save for their own retirement, and there are even better savings plans (MSA's, or Bush's new savings plans) in the pipeline. They get higher salaries and less job security in trade.
But you can't compare what people earned in the past (low salary and retirement security) to what current workers get (high salaries and financial independence/responsibility). It's no more fair to take away half of what older folks earned (retirement security) than it would be to confiscate IRA's from younger people just as they reach retirement age.
And, no, I'm not one of the retirees affected.
Don't sugar-coat it; tell us what you really think.
Unions force employers to pay more for under-performing workers. The employers are then forced to raise prices to pay for the slackers.
Other non-union companies reward employees based on performance, and fire the workers who fail to perform. These companies get more for their money, and can sell their wares at a lower cost than union companies. And we, the consumers, get better products, cheaper.
Unions served a role 50 years ago, but now they are a drag on themselves, their employers, and the economy. They are going extinct, and rightly so.
The Asian Steel Mills have been selling cheaper steel in USA for Yrs....some of the BEST steel sold in the USA, is Made in non-union steel mills...read in the WSJ a few yrs. back
The Asian Steel Mills have been selling cheaper steel in USA for Yrs....some of the BEST steel sold in the USA, is Made in non-union USA steel mills...read in the WSJ a few yrs. back
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