The Atlanta Journal-Constitution - November 16, 2004

OUR OPINION

Keep hands off retirees' benefits

When is a contract not a contract?

When it's in the financial interest of an employer to break a written promise to workers or retirees.

Companies that no longer want to keep their promise to pay the cost of health care benefits for retirees are going to court to challenge such agreements in labor contracts. In the absence of an explicit contract, health care benefits for workers or retirees could always be changed or eliminated at the employer's whim. Now, even benefits seemingly protected under labor agreements are being attacked.

The Wall Street Journal reported last week that employers have had some success in reducing union-won benefits. Favorite gambits include arguing for an interpretation of a contract that is more favorable to the employers, and adding escape clauses to benefit plans.

Unfortunately, retirees lack an advocate to protect them against losing health care benefits. Even worse, they may not be able to afford alternative coverage.

Active workers could use some help, too. Their latest challenge is the erosion of retirement benefits when companies sell or spin off part of their business.

Halliburton is a case in point. Early in 2000, the oil services company sold its stake in a business called Dresser-Rand. The sale allowed Halliburton to reduce how much Dresser-Rand employees would get if they took early retirement under the Halliburton pension plan.

Former employees appealed to the U.S. Labor Department for help, but four years later the case is still under review.

Another company, Abbott Labs, was sued this month over retirement rights. Former Abbott employees alleged a deal that cut a former business unit — now called Hospira — loose from Abbott Labs illegally denied them future retirement benefits. Once it was spun off, Hospira froze its pension plan and ended its health plan for retirees. The moves gave Hospira a one-time, $64.6 million profit boost.

Invariably, employers that cut benefits argue they are within their legal rights. All too often they are right, according to Norman Stein, a pension law specialist at the University of Alabama.

Coincidently, Rep. John Boehner (R-Ohio) on Monday renewed his call for comprehensive reform of the U.S. pension system "to protect worker retirement security." He could start by ensuring that employers keep their promises.