Beth Steel retirees must repay pensions

Former employees told to return part of payments to government agency

October 28, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Melvin Schmeiser, 56, took early retirement from Bethlehem Steel Corp. in 2000 with the promise of a $2,850 monthly pension check.

But now, Schmeiser's monthly checks are being cut nearly in half, and a government agency is demanding that he pay back a big chunk of the pension money he has already received - a sum he estimates at about $15,000.

Schmeiser is not alone. Hundreds of Baltimore-area retirees have been warned they can expect to face orders to repay thousands of dollars of their dwindling pension benefits to the Pension Benefit Guaranty Corp., or PBGC, the federal corporation that insures private pension funds and has been overseeing the Bethlehem Steel pension fund since April.

The Bethlehem Steel retirees have long known their pensions would shrink as the company that once was a major contributor to Baltimore's economy withered into bankruptcy.

But paying money back is something else again.

"It's certainly going to be a financial burden," said Schmeiser, who lives in Baltimore.

About 7,000 retirees - including 1,300 in Baltimore - will have their pension benefits reduced because the pension payments that they have been receiving over the past year exceed the legal limits of PBGC's guaranty.

They will begin receiving adjusted checks for their "estimated benefits" in December. Once the estimates are finalized, a process that could take years, the retirees will begin to see their checks reduced by up to 10 percent a month until the money they owe PBGC is paid off, representatives of the agency said.

"Some people could have six, seven months of extra benefits that they have to pay back," said Jeffrey Speicher, a spokesman for the PBGC, who noted that the corporation does not charge interest on the money it recoups.

Those who will need to pay the money back include workers whose pension checks were increasing as part of a collective bargaining agreement, those who exceed the PBGC's caps on pension checks and those who have been receiving an extra $400 a month to supplement their income until they turn 62 and become eligible for Social Security benefits, a lawyer advising the retirees said.

"Those are the folks who are going to see a reduction in their pension checks," said Bruce E. Davis, a lawyer for the Retired Employees' Benefit Coalition, an organization for retired Bethlehem Steel salary workers and their spouses and widows.

Len Shindel, who works in the sub-district office for the United Steelworkers of America, said many of the retirees worked overtime to increase their pensions.

"A lot of people worked a lot of overtime to build up their retirement average over years, and now they're finding that they're being reduced despite all the hours they put in to raise their retirement average," Shindel said. "And they worked that overtime in dangerous conditions and exposed themselves to danger while they tried to expand their pensions."

Many of the retirees, he added, are worried about how much their checks will be reduced.

"It's going to be traumatic for a lot of people," Shindel said.

Schmeiser, for instance, worked at Bethlehem Steel for 35 years. When he retired on Feb. 28, 2000 - at age 53 - he was promised an additional $400 per month for nine years, until he was eligible for Social Security benefits.

"They made me an offer I should have refused," Schmeiser said.

Now, Schmeiser's monthly check will be reduced from about $2,850 to $1,580. Plus, he will owe the PBGC the amount he has been overpaid from the time the old pension plan ended in December, until PBGC begins reducing the checks this December to the amount to which the corporation says he is legally entitled.

The upshot is Schmeiser could owe PBGC more than $15,000.

"I can't say somebody on purpose lied to me. I just never imagined Beth Steel would be going down the tubes," Schmeiser said.

Speicher, the PBGC spokesman, said the payment plan is designed to make the process as painless as possible for retirees.

"The recoupment policy is designed to stretch out the repayment without interest and to have it come out of future checks in very small amounts," Speicher said.

The affected retirees will be meeting with PBGC representatives this week in Baltimore to learn more about their reduced benefits.

A spokeswoman for Rep. C.A. Dutch Ruppersberger, a Baltimore County Democrat who represents Maryland's 2nd District, stressed yesterday the importance of collecting information from retirees so they can be given the pensions they deserve.

"Many of these retirees depend on the pensions for their livelihood," said the spokeswoman, Heather Moeder Molino. "It's important to go through this process so the pensions are given out in a fair manner."

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