Eric Morath / The Detroit News
Chrysler LLC's white collar retirees are losing free life insurance benefits but are eligible for an up to a $4,000 one-time pension boost, according to a letter retirees should receive this week.
Previously retirees were covered by a $50,000 life insurance policy at no charge to them. Now, Chrysler will allow workers to buy into a voluntary plan through MetLife at a reduced, group rate.
Eliminating life insurance is the latest is a series of cost-cutting moves for Chrysler under private ownership by Cerberus Capital Management LP.
The company significantly cut back production in the first three months of this year and has scaled back discounts for friends and family of Chrysler workers.
"We made this choice after looking at the competitive landscape," said Thomas Hadrych, Chrysler vice president of compensation, benefits and corporate services. He said about two-thirds of American's 1,000 largest companies do not offer life insurance to retirees. Current professional and management workers continue to have company-paid life-insurance benefits.
Chrysler has about 14,000 white collar retirees.
The increased pension payout, slated to take effect June 1, is intended to keep white-collar benefits abreast of those for United Auto Workers retirees who are scheduled to receive an up to a $2,800 bump in their payout over four years, in accordance to last fall's UAW contract.
White collar workers will receive from $1,000 to $4,000, depending on years of service and years since retirement. They may choose to take the payment as a one-time lump sum, roll it into an Individual Retirement Account, or have it paid as part of the monthly benefit.
Retirees did not receive a pension increase last year.
"We are pleased to offer the increased benefit," Hadrych. "Obviously a retiree could use the payment to buy life insurance, if they choose, but they are not related."