DuPont pension changes rattle ex-employees

A pension buyout offer that DuPont is making to retirees on the eve of the company’s merger with Dow Chemical has some ex-DuPonters worried about their future incomes.

The company made the offer to former employees late last month. It affects about 18,000 former DuPonters who are vested in DuPont’s U.S. pension plan but are not yet receiving benefits. Overall, the plan has about 137,000 participants.

The former employees receiving the offer can receive a lump-sum payout. They can also elect to begin monthly annuity payments or not change anything and receive benefits when they retire.

DuPont retirees have been vigilant about the firm’s benefits policies, especially after the proposed merger with Dow was announced in December. That deal is supposed to be completed by the end of this year. About 18 to 24 months later, the combined firm is set to split into three smaller companies.

Craig Skaggs, who spent 28 years in government and public affairs with DuPont, started a Facebook group called DuPont Pensioners about a year ago. It is up to about 4,200 members today, many of whom joined when the offer was sent out.

“We have for a while worried that DuPont might try to move us to an annuity,” Skaggs says, referring to an option whereby an insurance company takes over the pension plan. The offer from DuPont reminded group members of those fears.

Skaggs notes that retirees want to know which of the three new firms will be responsible for their pension liabilities when the spin-offs are complete.

Retirees also have accused DuPont of underfunding its pension. Depending on the metric used, the funding level is anywhere from 74% to more than 90%. Generally, 80% is considered underfunded by government regulators.

A DuPont spokesperson says the lump-sum offer is part of the company’s regular review of its benefits. “This offer is not happening because of the merger,” he says.

The company has been assuring retirees that their benefits will not change as a result of the merger and that it will continue to fund the pension as legally required. This year, the company plans to inject $230 million into the pension.