Pension facts are hard as steel

Beth Steel: Retirees meet with the federal agency that inherited responsibility for them from their bankrupt employer.

October 29, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

About a hundred angry Bethlehem Steel Corp. retirees piled into the dingy conference room of a Baltimore hotel in the Travel Plaza off Interstate 95 yesterday morning and demanded answers: Why wasn't the company funding their pension plans? Shouldn't someone have been policing the company? How could this have happened?

The questions came from some of the 1,300 Baltimore-area Bethlehem Steel retirees who will see significantly smaller pension checks next month and will have to start paying money back to a federal agency that has been overseeing their fund since April.

"I think it stinks," said Arthur Dickey, a 60-year-old retired Bethlehem Steel supervisor.

Dickey and his former co-workers at Bethlehem Steel are among retirees from thousands of floundering companies who have found themselves relying on the federal Pension Benefit Guaranty Corp. - PBGC - to provide retirement benefits they once thought their employer would supply.

With the economy struggling, the stock market down from years ago and hundreds of companies filing for bankruptcy protection, the PBGC has seen its burden increase by nearly 500 defined benefit plans in the past five years.

Workers with defined benefit plans do not contribute to their pensions and are given a set monthly payment upon retirement.

But what the PBGC agrees to pay can be less than the companies had promised.

The agency estimates that the plans it oversees are underfunded by more than $350 billion.

"Hundreds of pension plans are just turning themselves over to the PBGC and just walking away," said Bill Barry, director of labor studies at the Community College of Baltimore County.

"I think the whole thing's immoral," Virgil Broadwater said as he left the meeting at the Best Western hotel yesterday.

The 56-year-old former Beth Steel technician retired in January 2001. Now, he said, his pension payments will be cut nearly in half, and he estimates he will have to pay the PBGC $15,000 for extra money he has received since December.

With two children to support and his wife already working full time, Broadwater said, he has been looking to no avail for a job all year.

"This has put a lot of stress on our family," said Broadwater, adding that he never would have retired had he known his pension payments would be so small. "What they're doing is just pushing people into poverty."

Broadwater isn't the only one with plans to go back to work.

Timothy Darden, 52, said he, too, will have to find another job. Darden retired in April from his job cutting steel slabs, and said his monthly pension checks have been cut by $1,000.

Dickey, the retired supervisor, will also need a part-time job to make up for the cuts. He expects to owe the PBGC about $8,000.

"I spent 38 years at Bethlehem Steel, and that's what I stayed there for - the pension and the medical benefits," Dickey said. "And now we're losing both."

Bethlehem Steel terminated health care benefits for its retirees March 31.

The pension benefits meetings between the retirees and the PBGC that began yesterday will continue today as the pension cuts and repayments are explained to new groups of former steelworkers.

"In some ways the PBGC is like the minimum wage, they're trying to stretch the money to go around so they calculate the benefits at a lower level," said Barry, the labor studies professor.

Carol Price, 51, is thankful that she will at least have a check coming in from PBGC. Without the agency's checks, she would have nothing.

Still, after retiring from the line at Bethlehem Steel in 2001, Price said, she will have to pay back $3,600 of pension benefits that have come her way. She can't go back to work because of a medical condition, so Price relies on her husband's income to get by.

Frank Bonkowski figures he will owe about $4,700. He said he gave more than 36 years to the company, believing that if you work hard for your company then it will take care of you in your golden years. Bonkowski retired Feb. 1, 2001.

"You're taught you can go to work and give an honest day's work and do your job," he said. "What do you tell your children and your grandchildren about things like this? Where did it get me?"

The PBGC has been overseeing Bethlehem Steel's pension plan since April. It was terminated last December.

For local Bethlehem Steel workers, the shift to the PBGC means a reduction next month in pension payments because the checks they have been receiving since December exceed the legal limits of the PBGC's guaranty.

Later, after the PBGC makes final calculations of just how much the Bethlehem Steel retirees are entitled to each month under the federal insurance program, the retirees might have to repay the agency for any overpayments they received.

That means they could see their checks reduced by as much as an additional 10 percent a month until the money they owe the PBGC is paid off.

"It's unfortunate, but it's provisions of the plan," said Loretta Berg, a spokeswoman for the PBGC.

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