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The pension plan of bethlehem steel 2001

They are among thousands of retirees from troubled industries whose pensions are being slashed. The retired steelworkers have been hit especially hard, partly because they were promised comfortable pensions.

Most pensions fall below the cap, and retirees receiving them are not affected. But the PBGC cuts monthly payments that exceed the cap. The cap rises with age, so older retirees are allowed larger pensions than younger retirees.

Loss of Safety Net a Blow to Bethlehem Steel Retirees

Because so many businesses have been felled by the soft economy, the PBGC is paying the pensions of 940,000 retirees, up from 500,000 two years ago. The PBGC said that as many as one retiree in 10 sees a cut in benefits when it takes over a failed pension plan.

The failure of smaller steelmakers compounds the problems. Although Bethlehem's 95,000 retirees make up the largest pension failure ever, LTV Steel's pension plan covered 80,000 retirees, and National Steel's plan covered 35,000.

Clerihue said retirees in industries with generous pensions are the likeliest to be hit by reductions. Even though the agency became trustee of the pension plan in mid-December, Bethlehem continued to administer it until the end of August, when the PBGC took on that task, and the checks got slashed.

Among those affected is Russell Sexton of Valparaiso, Ind. Sexton, 56, toiled in the Burns Harbor mill for more than 31 years.

  • The money is subtracted from the retiree's monthly check based on actuarial estimates of how long the person is likely to live;
  • He isn't positive his illnesses were related to his work as a spray painter in the plant's fabrication division, where he said his spit turned red from inhaling fumes, or in the research lab where he regularly handled bags of asbestos;
  • Pension payments, which are being taken over by the Pension Benefit Guaranty Corp;
  • Although Bethlehem's 95,000 retirees make up the largest pension failure ever, LTV Steel's pension plan covered 80,000 retirees, and National Steel's plan covered 35,000;
  • Bruce Davis is a lawyer representing the Retired Employees' Benefits Coalition, a committee that tries to help former Bethlehem workers.

After working 31 years, many of them maintaining the mill's giant machinery, he retired to a part-time job cleaning out sewers. Bruce Davis is a lawyer representing the Retired Employees' Benefits Coalition, a committee that tries to help former Bethlehem workers.

Davis said about 7,000 Bethlehem retirees will see their pension cut, although for some the reduction will be minor.

  • The heaviest burden, Davis said, will be borne by retired workers who are under 65 and do not qualify for Medicare coverage;
  • His labor built propellers for battleships and girders for skyscrapers and bridges;
  • Bruce Davis, a retired Bethlehem Steel lawyer who serves as legal counsel for the Retired Employees Benefit Coalition, said several labor groups were negotiating to extend the retirees' health-care benefits, at least temporarily;
  • Most factories have been closed.

He estimates that 500 to 800 of those retirees worked at Bethlehem's Burns Harbor plant. Like some other skilled blue-collar occupations--autoworkers, for example, or aircraft assembly workers--steelworkers traditionally have earned relatively high pensions. Someone "who came out of high school and went straight to the mill, they had a very handsome pension," Davis said. Mostly it is people in their mid- to late 50s who are affected, Davis said.

Instead, the caps are determined each year through a formula based on average wages in the U. The PBGC said the caps always rise faster than inflation. Hurt by stock market Melbinger said retirees are indirectly victims of the stock market slide that began in 2000. As companies slid toward bankruptcy, the value of the stock holdings in their pension funds was falling as well.

Unprofitable businesses couldn't make up the shortfall. Those pension plans are taken over by the PBGC. That is because for nearly a year they received the pension they would have gotten from Bethlehem, not the lower pension they were due from the PBGC.

Steel mill retirees feel pinch from pension caps

The PBGC has a relatively painless way of recouping the overpayments, however. The money is subtracted from the retiree's monthly check based on actuarial estimates of how long the person is likely to live. For someone in their 50s, that could be decades, so the payback is spread out.

In any case, the pension will not be reduced by more than 10 percent.

No interest is charged, and if a person dies before repayment is complete, the PBGC does not try to collect from their estate.