Much of the credit for the Association of DuPont Retirees goes, without doubt, to Craig Skaggs.

Although Craig passed away before we were officially up and running, it was because of his dedication to preserving the earned benefits of DuPont retirees that he formed the very successful DuPont Pensioners Facebook group that eventually led to the formation of this Association.

What follows is a collection of Craig's posts from the DuPont Pensioners Facebook group.

Why Worry?

In 2015, after learning that an activist investor was making a bid to take over some aspect of DuPont, I, as a pensioner and investor, started paying attention to what was happening with my old employer. A friend suggested I read a book, “Pension Heist”, and it was an eye opener. I vowed to pay more attention to what DuPont was doing.

I watched as the CEO was summarily replaced by a virtual outsider, who had a reputation as a “breakup artist.” I watched with trepidation as the old chemical operations, including their legacy of environmental problems and liability, were bundled and sold off as “Chemours”.

But I only became completely engaged when the DowDuPont merger was announced, 5000 layoffs were slated and a block of R&D and Legal Dept. employees were “excessed.” The merged companies would become three companies, following a pattern established at previous companies headed by DuPont’s new CEO.

News media reports regarding pensions were vague. The company spokesman would not commit to benefits beyond this year. Other companies, such as GE, were bragging about reducing pensioner health costs to save stockholders $1 billion per year. SEC filings by DuPont said the company reserved the legal right to modify or eliminate benefits and pensions.

So, the Facebook group, “DuPont Pensioners”, which today has 8,100 members, began via word of mouth. And I’ve learned a LOT from posts and comments. I’m glad several letters have been sent to management asking for further clarification and commitments. No specific answers to questions have been forthcoming. Nothing meaningful has arrived in writing.

To date, here is what I believe:

  1. Our pensions (but not our other benefits) are currently given some protection by ERISA/DOL, and a portion of our pensions would be paid by PGBC if DuPont failed. The pension fund (now in State Street Bank and managed by DuPont Capital Management) appears to be funded approximately 72%, which is below the Pension Benefit Guarantee Corporation standard, according to their statement in the DuPont 2018 Annual Funding notice. Two major buyout offers to 27,500 pensioners may have further increased the fund shortage. Dow's fund may be a little better off. DuPont's own pensioner communication in April, 2018 shows DuPont's pension fund is not substantially funded and is under PBGC scrutiny. According to the Supplement to Annual Funding Notice of the DuPont Pension and Retirement Plan for plan year beginning Jan 1, 2017 and ending Dec. 31, 2017, using data not employed by the artificial MAP21 adjustment, the DuPont plan shortfall is $5,506,740,000 or only 71.62% funded. However, DuPont’ SEC 10K filing at the end of 2017 showed pension defined benefit obligations totaling $25.55 billion and assets of $20,284 billion. That is a funding ratio of 79.4%, up from 67.1% in 2016. Who knows what the real funding percentage is? Numbers modified by various accounting methods fly everywhere. In any event, It appears the defined benefit fund, globally, is more than $5 billion underfunded.
  2. Just like DuPont, a number of large companies (e.g., Clorox, GE, GM, Ford, Verizon) have offered a buyout of pensioners (which gets the pension costs off the books in a very positive way for the companies). This is a first step in “derisking”—moving the risk of pension liability from company responsibility to the pensioner/survivor. These same large companies, at greater expense to them and costs to the pension funds, have increasingly “derisked” their pension funds by entering into contracts with (primarily) insurance companies, such as Prudential, AIG, MetLife, etc., to take over the funds and write annuity policies to pensioners, assuring lifetime pensions described in the contract. This shedding of the guaranteed benefit pensions by the company comes with risks for pensioners: ERISA and PBGC protections go away. Only other insurance companies in the individual state of residence for each pensioner might back up a failed insurance company holding annuities. And the lifetime limits are usually $250,000 or less (much less than PGBC, in most cases). To protect pensioners, some kind of “firewall” would be needed at the insurance firm. And the firm would need backup “reinsurance” from another very; highly solvent source (Lloyds of London?) Also, insurance companies are exempt from antitrust regulations and only are regulated by state insurance commissions. And what happens to things such as the survivor benefits? For these and other reasons, derisking pensions to insurance annuities is a bad idea
  3. In DuPont’s case, the pension fund is underfunded. To “derisk”, the insurance company would require at least 80% funding of pension liabilities plus a large fee (usually 10-20% of fund size). So DuPont would have to shell out a big chunk of money for moving its $16 billion (or $20.3 billion) fund into an insurance company.
  4. If the fund, which owes 122,000 DuPont pensioners/survivors’ money, is put under the responsibility of a single DowDuPont unit (we also believe there are about 50,000 Dow pensioners, which begs several unanswered questions), the costs can become a major drag on earnings of that unit. If fund liabilities and assets are somehow split into 3 parts, and one of them is a "weak sister", that pension fund could be in trouble. And how will other (health, life insurance) benefits, which are paid from cash flow, be divided into the three companies? Will all three companies retain benefits? Will any, or all, of the three units be derisked to an insurance company? Are survivor rights protected?
  5. Why does the company management continuously refuse to communicate its plan options to us? They say these plans are uncertain, which certainly gives no confidence to pensioners and survivors. And importantly, after exhausting all our patience during the last three years and lying to us regarding funding the pension plan, they now have refused to meet with our legal counsel and a group of pensioners to discuss our concerns.
  6. Enough obfuscation and treating us like peons regarding our EARNED, promised deferred pay. Enough.


DuPont, in 1941 projected a need for huge increases in able-bodied workers as the burgeoning munitions industry "exploded". But the company couldn't support this growth, particularly as U.S. personnel were drafted.

The company in 1941 morphed its fledgling pension/disability plan into a major plan to entice employees with deferred, earned future income -- a paid retirement. And survivor benefits. A few months later, fully paid medical coverage evolved from the worker injury program. That's where it came from. Deferred, earned income (pensions) and medical coverage enticements -- these promises to compete for a decreasing supply of labor.

As the years streamed by, the greatest generation worked hard, building and running plants and laboratories. But automation and contractors took over employee spots. And then, in the 70’s, the baby boomers began taking over. Gone was the labor shortage that spawned so many deferred income promises. Life insurance programs were reduced by company management. Total family health care support morphed, in the early 80’s, into Health Maintenance Organizations. In the early 90’s, the company announced that employees and pensioners would have to pay 50% of every future health insurance increase.

In July 1996, the last pension adjustment, a monthly increase of $60 per month for each year of retirement after 1995, to help pensioners and survivors with inflation, was distributed. Then inflation adjustment increases stopped. None have been offered for 23 years, no matter the company financial performance or golden parachutes of $60 million to CEOs. And notwithstanding a stock buyback of $1 billion per year.

Then in October of 2002, the bottom fell out of the health care promises for pensioners and survivors. The company said if insurance costs continued to rise, in 2007 retirees would have to pay 100 percent of all future premium increases. For retirees older than 65, premiums rose 135%. For pensioners under 65, premiums rose 39%. And the company split pensioners’ health care programs away from employees, which meant in future, all retirees would be placed in a higher cost, higher risk insurance category. A giant hit for years to come. In 2005, dental plans for retirees were effectively eliminated from DuPont company support.

DuPont announced that in 2007 it would cap all subsidies for retirees older than 65 at $4,000. After that, pensioners bear all future premium increases. Today, that ever-reducing subsidy is a maximum of $1400, but only if retirees purchase insurance through its contractor, VIA health. If this Medicare supplemental coverage is purchased elsewhere, all health benefits for the family are cancelled.

DuPont also went to work eliminating its pension obligations. In August 2006, DuPont said it would cut its employees’ company pension benefits by two-thirds after 2007; all pension accruals were reduced. DuPont became the first major company to reduce accruals for its plan after Congress required companies with underfunded plans to add funding. Also, new employees, DuPont said, would receive no pension. Those older employees with accruals toward their pensions were hurt most, since most buildup of pension benefits occurs in the last three years of service. DuPont reduced it’s formula for pension calculation downward from 1.2-1.5% applied to the average highest three year’s pay to a factor of 0.4-0.5%.

In early 2016, DuPont offered to buy out 18,000 selected existing pensioners not yet receiving benefits for a one-time price far less than they would receive if they waited for full benefits. In 2017, another buyout of 7,500 was offered to further reduce company pension obligations.

In late 2016, the company put existing employees on notice that all accruals of pension obligations would end in late 2018, or with the first breakoff of one of the three new companies. But that was not enough. The company also eliminated retirement health benefits, including dental and life insurance, for all employees under 50, concurrent with the pension plan’s final demise for all active employees.

The company’s head of human resources, Benito Cachinero-Sanchez said, “The DuPont board and our senior management team recently completed an extensive and thoughtful evaluation of our retirement benefits, and determined that additionalchanges need to be implemented beginning in 2018. The changes will reflect another step in our multi-year analysis and bring us closer to the practices of our global peer set.”

In other words: “We are racing to the bottom.”

Another billion-dollar stock buyback was authorized by the board.

Meanwhile, 122,000 pensioners and survivors in active payment status, protected by federal government programs from the buyouts and pension cancellation, continued to watch their unprotected health benefits wither away. DuPont placed management of health benefits under a succession of consulting firms and announced that active pensioners over 65 must now buy any supplements to Medicare from VIA, an industry consultant group. Any pensioners or survivors that determined they could buy the insurance elsewhere were forbidden, lest their entire family benefits, including a $1400 annual stipend, DuPont’s only contribution/benefit, would be permanently cancelled. Those under 65 were transferred to a “high deductible” insurance program, with $1,600 deductible and a 20% copay. Costs of the health insurance companies were deducted from pension checks.

Pensioners now were surprised to hear many of their brothers and sisters were simply leaving DuPont/VIA and obtaining insurance elsewhere. Monthly pension checks were being eaten up with health insurance payment deductions: hundreds of dollars each month.

With health costs increasingly loaded onto active pensioners, who now were in a separate, high-risk, high-cost group separate from employees, and with no cost of living increases over 23 years to deal with inflation and health costs increasing 20% or more each year, pensioners and survivors now asked why their earned, promised, deferred income pension was being destroyed by company/insurance.

The federal government supposedly protects promised pensions, but the “end-around” by DuPont eating pensions with health care costs was a new tactic, increasingly used by many companies. And so, pensioner and survivor health care and other benefits are almost gone, and what little pensioners have is being taken for group health care.

When my Mother-In-Law, a survivor, died two years ago, her monthly pension check was $17/month, after deductions.

And the real problem today is that after hundreds of letters lamenting DowPont’s actions and asking questions as simple as: “Which of the three companies will support pensioners’ and survivors’ pension plan and benefits?” Or: “Can you tell us none of the companies will transfer pensions to an insurance company?”

No answers.

Pensioners and survivors who worked hard to earn deferred income in the form of pensions and other promised benefits are ignored.