Replies to post #4905 on Foreign Correspondence

[Amaunet]

Happened to think - Hemispheres, the United Airlines magazine that has sponsored the contest for six years, may have been playing politics by not putting Sam Apple's "The Administration and the Fury" in its print edition but rather only on its Web site as a Chicago bankruptcy judge last month granted permission to United to transfer financial responsibility for its pension plans to government insurer Pension Benefit Guaranty Corp., or PBGC.

Pension Benefit Guaranty Corporation (PBGC) is the federal agency that insures traditional pensions in case companies go belly up.

-Am


United workers, retirees afraid about pensions' future

By Marilyn Adams, USA TODAY
For 39 years, Earl Potter has fixed airplanes for United Airlines.

2005-06-21


Retired United mechanic Jesse Amador, 66, could lose a portion of his pension.
By John Zich, USA TODAY

He rises at 4 a.m., arriving at Chicago's O'Hare International Airport by 6 a.m. to work in rain, biting cold or summer heat.

Potter, who also has a pilot's license, has worked awful hours all these years knowing he could retire with a full pension this year at age 60. His dream: to leave Chicago and run a small-town airport.

But now Potter's dream, and his life, are on hold. United's decision to default on its pensions has left Potter and 120,000 other current and retired United employees in a bewildering bureaucratic limbo. A Chicago bankruptcy judge last month granted permission to United to transfer financial responsibility for its pension plans to government insurer Pension Benefit Guaranty Corp., or PBGC. It's the USA's largest corporate pension default.

Now, United employees and retirees are finding that pension "insurance" is a loose term that doesn't mean they will get what they expected when they expected it. Promises made in past labor contracts and personnel letters are moot, and no one will tell them what they can expect now.

The uncertainty seems to worry United people most. Frustrated retirees and active workers complain they can't get reliable information about how much will be in their checks once the plans are transferred.

The PBGC has an extensive Web site and an 800 number, but the agency says it can't give callers specific numbers because it doesn't yet know the exact value of funds it will get from United to help pay benefits. Also adding to the uncertainty are multiple court challenges that could delay the transfer.

United is the second industry player to go down this road, following a default by US Airways. With industry losses mounting by the billions, more airline workers could face the same.

Some United people are so uncertain and so scared, they are preparing to sell their homes or other assets, return to work or see their spouses go to work to avert what they fear is a financial crisis.

Potter, who turned his retirement forms in to United in April, hastily withdrew them after learning the PBGC is taking over. A lead mechanic, Potter is afraid to give up his $61,000 a year job now that his long-anticipated $39,670-a-year United pension is gone.

"For the past 30 years, I've been planning for retirement," says Potter. "Now, how do I plan? I decided not to retire because I couldn't get specific information. I have no idea what I would get."

He knows it wouldn't be more than $29,649 a year, or a 25% cut from what he had been promised. That's the most PBGC will pay anyone who retires at 60. PBGC rules see it as early retirement, and therefore discounts the maximum annual benefit of $45,614 for a retiree who is 65, which federal retirement law considers normal retirement age.

The PBGC has notified retired United ground workers, such as mechanics, that it has taken control of their plan. But how soon it will take over the plans for United's pilots, flight attendants and management workers depends on how soon the court rules on the legal challenges and how quickly the PBGC's bureaucracy can move.

The PBGC says it could take two years from the takeover to determine everyone's final benefit. "We have no idea what the final amount of our recovery will be," says spokesman Randy Clerihue.

Retirees and workers are not getting guidance from the company, which has posted only general information on its intranet. In recent testimony, United CEO Glenn Tilton told the Senate Finance Committee that the impact of the pension defaults "will not be as dramatically negative as some have portrayed."

Seen as insensitive by some, his remark is backed up by Towers Perrin, United's pension consultant. According to its analysis, 67% of current United retirees will keep all their current pension benefits. But among the other 33%, hundreds of recently retired pilots will lose most of their benefits. What they get will depend on their age, when they left the airline, and how much they were making.

"It's an absolute crapshoot," says retired Captain Neil Bretthauer of suburban Chicago.

The PBGC's calculations make no exceptions, no matter the case. The widow and daughters of United Captain Victor Saracini, whose plane was hijacked and crashed into the World Trade Center during the Sept. 11 attacks, are one of many pilot families to be hurt.

After Saracini's death, Ellen Saracini, 46, of Yardley, Pa., began collecting the widow's 50% portion of her husband's pension to support herself and her two teenage daughters. When she applied to the government's Sept. 11 Victim Compensation Fund, it deducted her late husband's pension, including money she now stands to lose, from her settlement.

By one accounting, Saracini could lose 65% of her check. "I've talked to three different people at the PBGC, and they couldn't tell me anything definitive," she says. The cut will force her to dip into savings to get her daughters through college and help support her father and mother, who has Alzheimer's. "People's lives are being drastically affected," says Saracini, who is helping lobby for changes in the law. "This isn't right."

Seeing their checks shrink

Under the PBGC formula, many workers who retire before 65 — the normal retirement age as defined by federal law — will get smaller checks than United had promised because they'll be docked for leaving the job early.

Employees whose pensions were beefed up under new labor contracts within the past five years also stand to lose. The PBGC doesn't honor the full amount of recent improvements.

Muddying the waters are three legal challenges to the pension terminations by unions for pilots and flight attendants, and by a group of retired pilots. They could at least delay transfer of the plans and determination of benefits. Retired pilots complain they are victims of a Catch-22. Federal aviation law requires airline pilots to retire at 60. PBGC views that as retiring early, which it penalizes with a reduction in benefits. The maximum PBGC payout at 60 is $29,650.

Before he retired at 60, Captain Tom Close earned $300,000 a year flying Boeing 747s between Los Angeles and Asia. Now, two years later, he's receiving an annual pension in excess of $100,000, but not for long. The maximum payout for a 62-year-old is $36,035 a year. That would be a cut of about 70%.

Now, Close works with a group of retired pilots that has raised $1 million to lobby Congress and to pay for the legal challenge.

"I'm depressed," he says. "This is going on and on, and we don't know when it's going to end."

Close's family will manage. His wife, Cathy, a retired school principal, receives a $21,000 annual pension. Their home in San Diego is paid for. So is Close's other love, a Cirrus single-engine plane that he now will have to sell. But they have a 14-year-old daughter to get through high school and college. His dream of a comfortable retirement is gone.

This isn't the first time United's workers have felt robbed of retirement. Led by the pilots' union, United's employees in the 1990s voted to take pay cuts in exchange for a 55% stake in the airline and seats on the board. Under the United employee stock ownership plan, workers could cash in airline shares at retirement. But when United filed for Chapter 11 protection in December 2002, the ESOP ended.

Close says he held nearly 6,000 shares worth about $500,000 at one point. Now, they are worthless.

Seeking out new jobs

Retired flight attendant Gail Rodosevich, 55, is so worried about her future that she's launched a new career selling skin products from her home in Pueblo, Colo.

She retired in April 2003 under an early-retirement package from United that included a pension and medical insurance. Rodosevich collects $20,424 a year from her United pension, within the PBGC maximum for a retiree her age.

Her pension checks should stay the same, but she fears her health insurance is at risk. Last fall, her share of the insurance premium jumped $188 a month when United made cuts as part of its bankruptcy-court-protected reorganization. Although United says it has no plans to cut again, she worries that the insurance could disappear, as did health insurance for retired US Airways flight attendants during its bankruptcy reorganization.

Rodosevich still has lingering pain from a serious spinal injury she suffered when air turbulence threw her backward during a flight. She was off her job nearly five years through three surgeries. Her husband, Chuck, who draws a pension from the state of Colorado, has chronic health problems.

"United says it told us things could change in bankruptcy," she says. Chuck, 57, is job-hunting, and they are considering moving to a smaller house, "so we're not at the mercy of the government."

Even retirees older than 65 aren't necessarily safe. Mechanic Jesse Amador, 66, of Chicago, retired from United in November 2001. For extra income, he works the 5:30 p.m.-2 a.m. shift maintaining planes for Mexicana Airlines at O'Hare International Airport in Chicago. After 44 years at United, he collects a $30,853 a year pension, within the PBGC payout limits. But Amador doesn't expect to keep it all. A 2002 labor contract enriched the mechanics' retirement plan.

Because that improvement is so recent, coming just months before the bankruptcy filing, the PBGC will give retirees credit for only part.

Amador, who has a 10-year-old and a college-age son living at home, would see his annual benefit drop 20%, to about $25,000, according to one unofficial estimate. And on Oct. 1, Amador, a diabetic, will leave Mexicana. "Physically, I can't handle it anymore," he says. Still, Amador calls himself lucky. He won't lose as much of his pension as younger retirees, and he gets Social Security. In e-mails and gossip, he's heard worse horror stories than his. "The rumors are rampant," Amador says. "Everyone imagines the worst."


http://66.102.7.104/search?q=cache:SISPJyzGq3kJ:www.usatoday.com/money/biztravel/2005-06-21-ual-pens....

[otraque]

o my:) <<Apple's story is told from Bush/Benjy's point of view as Vice President Dick Cheney, Secretary of State Condoleezza Rice and Defense Secretary Donald Rumsfeld prepare him for a news conference:

"'Go and get him Saddam's gun,' Condi said. 'You know how he likes to hold it.'

"Dick went to my desk drawer and took out Saddam's gun. He gave it to me, and it was hot in my hands. Rummy pulled the gun away.

"'Do you want him carrying a gun into the press conference?' Rummy said. 'Cant you think any better than he can?'">>