Companies Slicing Pensions as Baby Boomers Age Sears Defends Insurance Cuts as Retirees Fume
Comerford, Mike, Daily Herald (Arlington Heights, IL)
Byline: Mike Comerford Daily Herald Business Writer
Younger people looking into the eyes of their grandparents often say it makes them wonder about their own future.
Retirees sometimes have that effect on active employees as both watch the dramatic changes in retiree benefits.
A recent KPMG Peat Marwick study shows that the percentage of firms offering retiree health benefits has dropped nearly 10 percent since 1991, to 37 percent of all surveyed.
"Most (Fortune 500) companies have either made changes to their retirement plans in the last five years or are going to in the next few years," said David Certner, national senior coordinator of federal affairs for the American Association of Retired People in Washington, D.C.
"The measures they are taking will really affect future generations because they are shifting from an employer-guaranteed retirement system to an employee, nonguaranteed system."
Perhaps foreshadowing confrontations to come, retirees of Hoffman Estates-based Sears, Roebuck and Co. recently said they will picket stores during the holiday season protesting life insurance cutbacks.
"My amiable retirement from Sears is turning into an ugly divorce," Richard Bruce of Elmhurst wrote in an open letter to Sears' management circulated at a recent meeting of retirees in Darien.
Bruce and other retirees say "a sense of right and wrong" has been violated by cutting a cap of $100,000 in company-paid retiree life insurance back to $5,000.
Retirees at the Darien meeting said they will fight this change and further cutbacks they fear are in the offing.
Across the country large, established companies that once offered the most lucrative retirement policies are squeezing health, life and pension benefits.
Companies are discovering that they can cut costs by asking for more employee contributions, shifting the retirement burden to a 401(k) retirement investment fund and cutting some benefits to current employees entirely.
Sears employees who retire after the end of the year will not receive any life insurance. And after 2000, employees who retire will pay their full retiree health insurance and the formula for calculating pension benefits will change, resulting in smaller payments.
"I've been working here 33 years and I'm not going to get any (life insurance)," said James Bronson, vice president of benefits at Sears. "I'd say future (Sears) retirees will differ because they will get no life insurance and they will pay more for their health coverage. But they will have the possibility to earn more for their retirement and plan for it. …