Terry Haas knew what he was doing when he retired from Chrysler LLC's Toledo Jeep Assembly complex on Dec. 31 after 30 years on the line.
He knew the stakes. He had a plan.
"I figured I could make $8 or $9 an hour at another job and, with my pension, make the same money," the 50-year-old West Toledoan explained.
But just four months into his plan, Mr. Haas - like tens of thousands of other retired auto workers younger than 65 - is worrying about the carnage that a bankruptcy filing by his former employer would cause in his life.
Chrysler has until the end of this month to reach an agreement with a number of stakeholders, including its unions and bondholders, on concessions that would allow it to survive as a viable company in an alliance with Italian automaker Fiat SpA, or face potential liquidation.
General Motors Corp., which also has a large number of retirees locally, has until the end of May to submit a viability plan to the government or face what
Chief Executive Officer Fritz Henderson has called a "probable" bankruptcy.
In both instances, among the costliest financial hurdles to be overcome are retiree pension and health-care benefits. Almost 930,000 people are covered under GM and Chrysler's pension plans, and union officials estimate that more than 60,000 active and retired auto workers live in northwest Ohio and southeast Michigan.
But not all retirees are in the same boat.
Retirees like Mr. Haas, who were employed 30 years or more by the automakers but are still too young to qualify for Social Security benefits, stand to lose tens of thousands of dollars each year if one or both of the automakers goes bankrupt.
Since his retirement with a voluntary separation package, Mr. Haas has received a monthly pension check from Chrysler of about $3,150 under provisions of the automaker's contract with the United Auto Workers that recognizes employees with 30 or more years of service.
The agreement provides for a monthly cash supplement to bridge a retired employee from their current age until qualification for Social Security at age 62.
When Social Security kicks in, the supplement disappears.
But if one of the automakers goes bankrupt and turns its underfunded pension plans over to the federal Pension Benefit Guarantee Corp., the supplemental payments will more than likely disappear as well.
"If they go bankrupt, my supplement might go away," Mr. Haas said. "That would reduce my pension by 70 percent, in the worst case. I'd be down to $700 a month."
The pension agency said GM's pensions had a $20 billion shortfall at the end of November, of which the federal agency would guarantee only $4 billion, a spokesman for the agency said.
At Chrysler, the agency would cover $2.2 billion of the $9.3 billion unfunded pension liability.
For retirees over age 65, the maximum amount by law that the pension agency can pay in benefits is $54,000 a year.
But for those under 65, the pension agency has a sliding scale based on age that can result in a dramatically reduced benefit, regardless of years of service.
Under current funding guidelines from the pension agency, the maximum guarantee for a participant from a forfeited pension plan who retires at age 62 is $42,660 yearly for a single person with no other beneficiary. At age 55, the maximum guarantee is $24,300 annually.
Chris Rooks retired from Jeep in March 2008 after 31 years on the job. At 51 and with a wife and two children still in school, he planned to take a few months off and then get another job to supplement his pension from Chrysler. Now, he finds himself worrying about his family's future.
"I guess there aren't any guarantees," Mr. Rooks said, now in his eighth month of looking for another job.
"It was like, when we left, we asked, 'Nobody can touch this, right?' And they said, 'Yeah, nobody can touch this.' But only a very small percentage of that pension is guaranteed."
With Chrysler facing the first viability deadline this month and struggling to come to acceptable terms with its bondholders and unions in the United States and Canada, Mr. Rooks can only watch as a very interested bystander.
"The more you hear about them talking about bankruptcy and stuff, the more depressed you get, but what do you do? It's just one of [those] things," Mr. Rooks said. "I just keep looking for another job."
Contact Larry P. Vellequette at: