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Retirees to get gift from USX
Tuesday, November 16, 1999 By Len Boselovic, Post-Gazette Staff Writer
More than 20,000 nonunion retirees of U.S. Steel will get a belated Christmas gift thanks to a $2 billion-plus surplus in the company's pension fund.
Around Feb. 1, nonunion workers who retired prior to 1991 and still get a monthly pension check from the steel producer will receive a bonus of $100 for each year they've been retired. Spouses of deceased salaried retirees will get half of that amount.
Nonunion workers who took a lump sum distribution instead of a monthly check do not qualify for the bonus.
USX Chairman Thomas J. Usher notified U.S. Steel's 22,000 nonunion retirees of the bonus in an Oct. 20 letter. The company declined to say how much it will pay, but leaders of a vocal group of U.S. retirees in Minnesota estimate eligible retirees will receive roughly $39 million, or about $1,800 per retiree.
The bonus for salaried retirees comes after the United Steelworkers of America negotiated enhanced pensions for U.S. Steel's active union workers as well as a small lump sum payment next Aug. 1 for retirees and surviving spouses of former union workers. The improvements were part of a five-year contract ratified by USW members in August.
U.S. Steel spokesman Mike Dixon said that while the company is under no obligation to do anything, the one-time payment "is a recognition of those employees and the role they did play with the company."
Retirees have watched U.S. Steel's pension fund surplus grow in recent years thanks to the booming stock market. That's meant the value of the pension fund's investments has outpaced what U.S. Steel is obligated to pay to retirees.
However, retirees' living expenses have been going up at the same time. While union workers got a piece of the surplus through contract talks, nonunion retirees can't. Their pension plan, like most so-called defined benefit plans, does not include a provision for cost-of-living increases.
A year ago, a group of about 150 retirees at U.S. Steel's iron operations in Minnesota began pressing the company to a pension increase based on the pension fund surplus, which stood at about $2.7 billion at the end of last year.
"We thought it was an opportune time to make this appeal," said Ralph McBride, a Duluth, Minn. accountant who retired in 1981 after 35 years.
The retiree group has written several letters to USX asking for an increase and has made their case in the media. But McBride, 78, doesn't think his group can take credit for the bonus.
"They know that we know that the wage earners [USW members] received something," he said.
Dan Hestetune, chairman of the retiree group, isn't happy with the bonus. The 70-year-old former mine superintendent said inflation has eaten into his monthly check since he retired in 1986. He said the average management retiree receives an annual pension of about $16,000. Under the steel producer's new contract with the USW, the minimum monthly payment for hourly workers who retire with 30 years service increases to $1,575 next August, or $18,900 a year.
While USX has no legal obligation to share the pension fund surplus with salaried retirees, "we believe there's a moral obligation," Hestetune said. As for the one-time payment, "That's not what we consider true pension reform," said Hestetune, who still does some consulting work for U.S. Steel.
Defined benefit pension plans pay a monthly payment based on a worker's earnings and years of service. A spokesman for the Employee Benefit Research Institute, a Washington, D.C. research group, said only about 28 percent of defined benefit plans have cost-of-living clauses. Another 19 percent of companies have given cost-of-living increases in the past even though they weren't obligated to, he said.
U.S. Steel's management retirees got a minimum monthly increase of $50 in their pension checks in 1992, Dixon said.
While the pension surplus is tempting to retirees, it's also a big reason why the nation's No. 1 steel producer made any money at all this year in the face of import-depressed prices. U.S. Steel's operating income for the first nine months of the year included $348 million in pension credits. The company's net income for the same period totaled only $15 million.
In his Oct. 20 letter, Usher cautioned that the pension surplus "is due in large part to a strong stock market which is unique in American history.
"Depending on when [the market] goes down and how far it goes down, this surplus may disappear."
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