Steelmaker broke pension promise

Republic didn't set aside funds or pay premiums


CINCINNATI - Minutes after listening to her union and a government agency argue legal nuances before three appellate judges, 56-year-old former steelworker Patti Reich of Alliance, Ohio, lashed out against the system that she thought would protect her.

"We thought the United States of America would honor a contract," Reich said.

She was angry at the Pension Benefit Guaranty Corp., the government agency that insures pensions but wants to deny Reich and other former Republic Technologies International workers the benefits they thought were set on the eve of the company's breakup.

The stakes are high for the government and the workers. The 2,500 former Republic employees are fighting to preserve benefits that the agency says will amount to $96 million. And they hope to start receiving monthly pension checks immediately rather than having to wait until they're in their 60s.

At stake for the agency is not only the $96 million, but also potential exposure to $10 billion to $15 billion in payouts to companies in the steel, aerospace, automotive, and tire and rubber industries, agency spokesman Randy Clerihue said yesterday.

Clerihue said the culprit in the steelworkers' case is their employer, which made promises it couldn't keep.

Much of yesterday's arguments focused on an agreement reached by the Fairlawn, Ohio-based bar-steel manufacturer and the union after Republic filed for bankruptcy protection in 2001 and announced that it would have to sell assets.

The parties negotiated a modified labor contract that workers thought would provide them previously negotiated shutdown pensions. A subsequent sale agreement specified that the company would close before a new owner took over.

The agency says Republic never set aside money to fund those early pensions and never paid insurance premiums on them to the PBGC.

The agency moved two months before Republic could close to terminate its pension plans and prevent the shutdown pension provisions from kicking in.

But to Reich and the hundred or so other union members who traveled to Cincinnati for the early-morning arguments, the only thing that matters is that they aren't collecting the monthly pension checks they had counted on.

Reich, who had 26 years' tenure when she lost her job in the metallurgy lab at Republic's plant in Canton, Ohio, is working three hours a day caring for elderly people.

"It's a very sad situation. We look at our contract and we believe we're protected," she said.

The legislation that governs the pension agency, which was intended to prop up pension guarantees, was equally "full of holes and cheese," she said, lamenting that the pension agency didn't do more to force companies to pay adequate insurance premiums.

Reich says she's out of jobless benefits, has run up $10,000 in medical bills since her insurance expired and hasn't found a full-time job despite making "at least 430 applications."

The judges did not indicate when they would make a ruling.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.