Cincinnati, OH, Jan. 23--Several hundred retirees of Formica Corp. have been notified by the company they've received incorrect pension payments, according to the Cincinnati Enquirer. Some of the payments go back a decade or more.
The company, which last week won bankruptcy court approval of its Chapter 11 reorganization, says about 440 of the 624 retirees under its defined benefit pension plan from 1985 to 1998 received incorrect benefits.
Of that number, 295 received overpayments and another 145 were underpaid, said spokesman Richard Wool.
"This could be a disaster for these folks," said Mike Hauser, president of International Union of Electrical Workers Local 757, which represents hourly workers at the Evendale plant.
He said an auditor hired by the company found mistakes in a handful of pension payments checked in the summer of 2002. The company then checked all the payments and discovered more problems.
Wool said the total overpayments are about $1 million and underpayments total about $500 million. The problems are not connected to the bankruptcy reorganization, he said Most of the overpayments are about $10 a month, he said.
But one Formica retiree said he was notified his benefit would be cut $87.50 starting this month.
Arvil L. Gambrel, 68, who took early retirement in 1996 after 40 years as a lab technician, said he can live with the lower benefit "but I'm not going to like it."
Gambrel, who lives in Ross Township, is baffled at how the plan can adjust benefits so many years after the retirees and the company signed documents agreeing to the pension amount.
"It's like you bought a car for $20,000 and then a year later they come back and say, "We made a mistake. You've got to pay $25,000," he said.
Gambrel said his notice says the pension administrator made a miscalculation in figuring his age for the pension, even though the letter contained his correct birth date.
Donald Lewis, 70, who retired nine years ago after 39 years with the company, said his benefit will be cut $60 a month.
"That won't help, with everything else going up," said Lewis, who lives in Wyoming.
"I'm pretty bitter. This shouldn't happen. Why did it take this long to find the mistake?"
Wool said the pension plan, administered by the company, is required by law to recover overpayments and make up underpayments.
It is complicated by the fact that the Internal Revenue Service, federal Employee Retirement Income Security Act and the bankruptcy court all have oversight.
"The IRS is taking the lead on this," he said but it may take months to figure out."
Wool said it's not clear yet how overpayments will be collected.
"The company wants to make it as equitable as possible," he said.
Retirees who were underpaid, some as little as penny a month, will receive lump sums, he said.
Just how the miscalculations occurred is unclear, he said, but over the 14-year period the company changed hands five times and that could be a contributing factor. No problems were found in the pension calculation prior to 1985 when American Cyanamid owned the company.
