Retirement News : Seniors : An uneasy retirement

An uneasy retirement

Date Added: 24-05-2005

Hank Thuener has delayed costly surgery needed to ease the lingering pain in his knees, a constant reminder of the 37 years he spent lifting heavy aircraft parts at United Airlines.

He also shelved plans to purchase a $60,000 John Deere tractor, choosing the much-cheaper option of installing a new engine and clutch in the 1969 model he uses on his small farm in Weld County.

 
The 57-year-old even asked his daughter to rein in expenses as he looks for ways to continue helping her financially with college.

So goes the life of a retired United Airlines worker, one of more than 120,000 current and former employees who will bear the brunt of the bankrupt carrier's move to abandon its underfunded pensions. The nation's second-largest airline received U.S. bankruptcy court approval last week to transfer the plans to a federal agency that will insure less than 70 percent of the promised benefits.

The decision, which is being appealed by one union, will ripple to Colorado, home to more than 6,000 current United employees and scores of retirees who stand to lose thousands of dollars annually.

Those workers now find themselves in a haze of uncertainty.

Unions say their members could see pension payments shrink anywhere from 5 percent to more than 50 percent, although some won't see much of a decrease at all.

But workers won't know exactly how much they'll lose for several months, maybe longer. Adding to the confusion is that each worker will be affected differently, depending on their age and several other factors.

"People at United are just being taken apart," said Thuener, who estimates he will lose $1,000 a month, or about one-third of his current pension pay. "This is incredibly frustrating, even devastating. We're all sitting here trying to re-evaluate our finances on numbers that don't exist yet."

Their plight garners little sympathy from a growing number of pensionless U.S. workers, who view an employer- sponsored retirement as a luxury. But United employees work under conditions forged at a different time in American business, when companies often provided not just lifetime employment but a worry-free continuation of benefits after a worker's last day on the job.

The pension termination is particularly troubling for retirees, who in many cases depend solely on the monthly payments and already are facing higher health care costs than a year ago.

Some say they will have to make adjustments to their spending habits, delay big purchases or scale back their retirement plans in small, everyday ways. Others will have to find jobs to pay the mortgage and monthly bills.

Current United employees say they'll have to work longer than expected to sock away enough savings for their golden years. And their near-term economic outlook isn't exactly promising either because of wage and benefit cuts the airline says it needs to exit bankruptcy.

Still, United and some experts say pay and pension cuts are better than the potential alternative: the airline's failure, in which case workers could lose much more.

$3 billion in pension payouts lost

For years, United employees and retirees viewed pensions as one of the few sure things in the business world. Even when many workers lost thousands of dollars several years ago through United's stock ownership plan, they took some solace in the fact that they still had pensions.

Bob Stone, a Lakewood resident who worked as a United mechanic for 37 years, said he long viewed pensions as untouchable. But the 55-year-old began to worry when United, which filed for Chapter 11 bankruptcy protection in December 2002, announced last summer it would cease funding the pension plan while in bankruptcy. Retirees continued to receive payments, but it was the start of major changes.

The airline - grappling with soaring fuel costs and intense competition from discount rivals - also said at the time it was considering pension termination to help it cut expenses and emerge from bankruptcy.

"I always thought there was no way they could go back on all those promises. More than anything, it was a moral issue," Stone said. "But when they missed payments, I started to rethink that assumption."

Unions representing workers vehemently opposed pension termination and had been talking to United about alternative ways to cut costs.

But last month, the carrier announced a surprise deal to transfer its pension plans to a federal agency that insures such benefits.

Under the plan, the Pension Benefit Guaranty Corp. will fund $6.6 billion of the airline's nearly $10 billion in pension obligations, meaning workers will lose out on more than $3 billion in expected benefits.

Unions tried to fight pension termination in court, arguing United could find the cuts elsewhere.

But the hammer fell last week, when a bankruptcy judge in Chicago ruled in favor of United's plan - calling it the "least bad" of unfortunate choices - in front of a courtroom packed with emotional employees and retirees.

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