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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