Kristine
Solomon March 28, 2019, 8:11 AM
Sears announced
this month that an undisclosed portion of the struggling department store
chain’s 90,000 retirees would be losing their life insurance benefits.
The
retailer sent letters to the retired employees informing them that their life
insurance would be axed as of March 15, according to Ron Olbrysh, chairman
of the National Association of Retired Sears Employees (NARSE) — and some
allegedly didn’t receive their letter until after that date had passed.
The
dreaded news came just a month after Sears chairman Eddie Lampert saved the department store from bankruptcy by
having a $5.2 billion bid approved, allowing about 40,000 current Sears
employees to keep their jobs.
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Olbrysh
doesn’t know exactly how many of the 90,000 former employees would be affected
by the decision, but a recent benefits report detailed that the company had
paid about $16.6 million in premiums for eligible retirees in 2017, according to the Chicago Tribune. According
to the notice, retirees have the option to convert all or part of their group
life insurance policies to individual whole life policies and pay the premiums.
One
retiree, 76-year-old Tom Dowd of Delaware, had worked with the company for
30 years when he retired as a human resources manager in 1998. “I spent my
adult life there,” he told the Chicago Tribune, “and if nothing
else, that requires a little bit of dignity as opposed to a letter saying your
benefits are gone, and here’s how much you can pay to get them back.”
Hints
of the drastic move emerged in October, when Sears requested bankruptcy
protection. At the time, the Pension Benefit Guaranty Corp. (PBGC) won a
lawsuit to take over retirees’ two pension plans from the retailer. Life
insurance was the last benefit retirees had with Sears, which offered its
workers a coveted benefits package in its heyday.
The
first cuts to life insurance policies started happening back in 1997. As of
2019, Sears was still covering policies worth at least $5,000 for eligible
retirees, and most policies ranged from $8,000 to $10,000. Most of the people
affected by the loss are in their 80s and 90s, according to CBS News.
But
Olbrysh said Sears’s decision to rescind life insurance is more than just a
major blow to former employees — he claims it’s also a violation of a 2001
settlement agreement that said retirees’ life insurance could only be taken
away if the department store chain liquidated and went out of business. Because
of of this agreement, Olbrysh and NARSE had not been expecting the policies to
be dropped, so they’re considering taking legal action — but they’re not sure
it makes sense to sue “a company that is dying.”
Yahoo
Lifestyle has reached out to Sears for further comment.
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