Thursday, 23 May 2019
BREAKING NEWS

Sears cuts retirees life insurance | Business – Journal Inquirer

Months after clawing its way back from the edge of liquidation, Sears has canceled life insurance benefits for an unknown number of the company’s 90,000 retirees, according to a group representing the retailer’s former workers.

The National Association of Retired Sears Employees said Sears Holdings, the parent company of both Sears and Kmart, had notified a number of eligible retirees by mail that their policies with Securian Financial would be terminated as of March 15. The organization said the letters appeared to have been mailed out on or just shortly before that date, meaning most recipients had already effectively lost their life insurance by the time they got the news.

Ron Olbrysh, chairman of the retirees group, said he’s received about 60 phone calls from panicked members over the last several weeks asking how the company could go back on what they thought was an ironclad commitment. Olbrysh, who worked at Sears for 24 years and served as assistant general counsel for the last dozen before his retirement in 1996, got his own letter on March 21.

“The retirees are shocked that Sears would do something like this,” he said Friday. “A lot of people didn’t go out and get life insurance on their own because they trusted that the benefits they had through Sears would be there for them.”

The National Association of Retired Sears Employees said the company is offering to convert all or a portion of former workers’ plans that were previously paid for by Sears to whole life insurance policies. But the organization’s leadership is already hearing from members who say they can’t afford the payments necessary to maintain their coverage.

Sears Holdings did not reply to a request for comment Friday.

Olbrysh said the company’s life insurance policies were worth at least $5,000, with most ranging between $8,000 and $10,000.

“It’s not a huge amount of money, no question about that,” he said. “It’s the principle. This is taking away the last benefit that the retirees have.”

The average age of former employees affected by the termination is 80, Olbrysh added, with some in their 90s.

Sears, which faced more than a decade of declining sales and had not been profitable since 2010, filed for Chapter 11 bankruptcy protection in October. After months of legal wrangling, mass store closures, and protests from the chain’s creditors, Chairman Eddie Lampert reached a deal with Sears Holdings to buy out the ailing retailer for $5.2 billion, preserving about 500 stores and allowing around 40,000 employees to keep their jobs.

Some workers and retirees had voiced reservations about the sale, however, faulting Lampert for the company’s decline over his 13-year tenure as chairman. They were equally pessimistic about the chain’s future as a privately owned entity, worrying that benefits would slowly erode as the business restructured.

With the life insurance termination, at least some of those fears have been realized.

“Sears used the life insurance as a selling point, to get people to come to work for them,” Olbrysh said. “Now it’s gone, and we have Eddie Lampert to thank for that.”

The retirees association said it has at least two powerful legal precedents on its side: a federal law requiring 30 days’ notice prior to cutting off life insurance, and a settlement in a class action lawsuit that barred the company from canceling its policies unless Sears went into liquidation.

The settled agreement arose from progressive cuts to benefits implemented in the late 1990s under then-Chairman Arthur Martinez. The plan, which would have reduced all of the company’s policies to $5,000 in a matter of years, became a target for employee lawsuits, and a federal judge eventually blocked the final round of reductions in 2001.

The deal also stipulated that Sears could not cancel its life insurance policies unless it went out of business.

Olbrysh said leaders of the retirees group will be meeting with attorneys to consider options for legal action against Sears. Any challenge to the company would most likely take the form of a class action lawsuit, he said.

Source: https://www.journalinquirer.com/business/sears-cuts-retirees-life-insurance/article_a420dc5a-5249-11e9-8578-4f67cff98809.html

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