Bethlehem Steel's Retirees Face Uncertainty

October 18, 2001 (PLANSPONSOR.com) - Despite its filing for Chapter 11 bankruptcy Monday, Bethlehem Steel aims to keeps its benefit plans intact, CEO Steve Miller said.

Still, while the 97-year old company seeks to save itself through a restructuring, it faces growing pressure on its benefit plans. Combined, Bethlehem’s retirement programs total some $7 billion in assets. Its pension plan has more than $6 billion in assets. Meanwhile, its two 401(k) plans total more than $1 billion, according to the 2001 Nelson’s Directory of Plan Sponsors 2001.

Doing the Right Thing

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Miller has assured the firm’s 74,000 pensioners that their benefits would not disappear. In a memo, he told them that the pension plan will not be terminated and that life and health insurance programs are intact.

However, Miller predicted in a Wall Street Journal article that the pension plan would be underfunded by $1.85 billion next year. The company’s $300 million health care bill will only adds to its burden. It is obligated under a collective bargaining agreement to offer the plan.

Formally, these liabilities to pensioners are called legacy costs and they can make it extremely difficult for the competitors of domestic companies to consolidate, merge or purchase the assets of integrated steel mills.

Whereas typically pension assets would make a firm like Bethlehem an attractive acquisition target, its obligations to its pension plan, particularly its health bill, will become a liability to its new owner, in the event of a sale.

Union Role

One speculated move on Miller’s part would be to petition the United Steelworkers of America to allow the firm to forego some of the conditions of its health benefits program. This may not sit well with Bethlehem’s retirees. Lou Gerard, president of the USWA, is reportedly not considering letting Bethlehem or any other financially troubled steel company to cut benefits to save money.

The participants of Bethlehem’s 401(k) plan, on the other hand, may have already witnessed a significant amount of loss in their accounts. More than $78 million is invested in the plan’s company stock options program, or 8% of total defined contribution assets. Participants with Bethlehem stock in their 401(k) plan have seen the stock decline from a five-year high of $16 a share to barely 37 cents yesterday.


 

Calvert Posts Reconstitution List for Social Index

September 18, 2001 (PLANSPONSOR.com) - Calvert has posted a preliminary list of membership companies for the Calvert Social Index and has presented it to the Calvert Social Index committee for approval.

The committee is scheduled to meet this week and approve a final membership list, which would be effective after the market closes on Friday, September 21.

Constitution Criteria

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Launched on May 1, 2000, the Calvert Social Index starts by taking a base of 1,000 of the largest companies in the United States. From the base of 1,000 companies, Calvert’s Social Research Department analyzes each company using its proprietary social criteria. Calvert considers corporate performance in six broad areas:

  • the environment
  • workplace issues
  • product safety and impact
  • international operations and human rights
  • weapons contracting
  • indigenous peoples’ rights

Real time performance of the Calvert Social Index is distributed through the Chicago Board of Trade and available through news agencies, financial services companies, brokerage firms and the Calvert Web site ( www.calvert.com ).

Calvert has approximately $7.5 billion in assets under management and offers twenty-seven portfolios that allow individual and institutional investors to pursue a range of investment objectives within a single fund family.

– Nevin Adams                             editors@plansponsor.com

The preliminary list is posted on http://www.calvert.com/invwcal_2936.html

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