Legally, companies can change their plans to end special early retirement pensions, but if they do, employees must still get the portion of the special benefit they have earned as of the date of the change – as long as they later meet its age and/or service requirements. But as employees of Dresser-Rand learned, if the ownership of your company changes, your special early retirement benefits can disappear, even though your day-to-day work life is unchanged, and you continue to work for the same company in the same job in the same office in the same location.
Kathy Joy-Kirkendall is an engineer who worked for Dresser-Rand in upstate New York her entire career. She stayed with the company because of the promise of a special early retirement pension. She knew that if she left the company before age 55 she could lose nearly half of her promised pension. What she didn’t know was that she could also lose out as the result of a corporate restructuring. In her case, Halliburton, part-owner of Dresser-Rand, sold its interest in the company, but kept the pension plan. Halliburton told Kathy that since she would not be a Halliburton employee at age 55, she was not eligible for the promised pension. Kathy estimates that Dresser-Rand employees have lost at least twenty five million dollars.
In 2007, Senator Tom Harkin (D-IA) introduced the Restoring Pension Promises to Workers Act of 2007 (S. 1725), which included a provision to close this loophole in the law. This bill would have required that companies “follow the same rules about applying credits toward pensions under mergers and acquisitions that they do under any other kind of pension plan amendment.” To read more about the legislation, read our summary of this provision in the bill.
Kathy Joy-Kirkendall’s situation is summarized in two New York Times articles, see “A Hard-to-Swallow Lesson on Pensions” and “Shriveling of Pensions After Halliburton Deal”.< Back