Back in 1971, when he went to work at a General Electric Co. plant in upstate New York, John Phelps probably wasn’t naive in believing that the company would take care of him to the grave.
That was reasonable in those days, when so many jobs in the U.S. still came with generous long-term benefits. And in fact, Phelps clocked out in 2013 at age 64 with a pension, a rare thing in the 21st century.
But he feels ripped off. GE has cut retiree health-care benefits and on Dec. 7 slashed to a penny the dividend many former employees once relied on as income. He doesn’t care that GE is swimming in debt and other woes.
“GE used to promise us, ‘You’ll never have to worry about anything,’ and then they started taking things away,” said Phelps, a founder of Retirees Against GE Health Care Changes. “People are scared.”
When his group started 19 months ago, it was focused on curbing the erosion of medical benefits. Now it has another worry: GE’s defined-benefit pension plan is underfunded in the U.S. by almost $30 billion. That’s adding to retirees’ concerns even as GE takes steps to shore up the plan.
Phelps said the group’s 1,800 members know they’re trying to climb a big hill. Courts have rejected two lawsuits claiming GE breached its fiduciary duty when in 2015 it started ending health plans that supplemented Medicare for nearly 200,000 retirees and their dependents. Instead, it gives them each $1,000 a year to help cover the co-pays and prescription drugs that Medicare doesn’t.
That’s still more than many older Americans get. But the stipend isn’t enough to keep up with the cost of coverage, Phelps said. A survey by his group found two-thirds of respondents ran out, with a third of those exhausting the stipend in the first half of the year.
Mary Anna Feitler, 75, who worked at a GE plant in Indiana for almost 27 years, said out-of-pocket medical expenses for her and her husband have grown by about $5,000 a year to $22,000.
“We’re doing OK,” Feitler said, but “I don’t know whether to anticipate that it’s going to get worse.”
That’s the concern, as the troubled company continues to look for ways to cut costs. Its market value has plunged by more than $200 billion since the end of 2016, driven down by a slumping power market, cash-flow shortfalls and the weight of more than $100 billion in debt.