All Polaroid employees are being terminated by the company as part of the firm’s sale to Bank One’s One Equity Partners (OEP) (see Polaroid Sale Seems to be in the Can ).
At least in theory, that termination would entitle any employee to receive a lump-sum payment, even though most expect to be rehired by the new company emerging from bankruptcy. OEP has already said it would not assume responsibility for the underfunded pension plan.
According to a Boston Globe report, Polaroid employees said their managers sent them an e-mail on Monday or Tuesday with instructions to apply for the payout.
‘There is a rumor going around that pension applications are being accepted at the [human resources service center in Waltham],’ the memo read. ‘This is not a rumor. They are being accepted.’ According to the report, the memo also included three forms for employees to fill out to receive a lump-sum payment.
Taking Their Lumps
Like many employers, Polaroid has offered retiring or laid-off employees the option of taking a lump sum of their accrued pension benefits.
Ironically, that same practice came under fire last December when a number of executives retired just ahead of the firm’s filing for Chapter 11 bankruptcy protection, allowing them to tap into those benefits before the underfunded plan came under the control of the Pension Benefit Guaranty Corporation (PBGC).
The PBGC, which insures the nation’s private pension system, provides coverage when pension plans are no longer supported by employer contributions, but does so only up to a predefined limit. The Polaroid executive pensions would have exceeded that limit (see Polaroid Retirees Try To Block Executive Bonuses ).
The combination of concerns about employment, the widely-reported underfunded status of the pension fund, and the impact of an email acknowledging the lump sum option apparently sparked a “frenzy”, according to the report – triggering some workers to rush home to get their spouses’ notarized signatures on the application forms (at least one worker cut short their vacation to get the forms, according to the report).
The Globe said that on Wednesday morning, dozens of people lined up outside the human resources department to drop off the forms by the deadline.
However, on Wednesday afternoon, just as the company was announcing the completion of the acquisition by Bank One’s One Equity Partners division, a separate e-mail dated July 29 was distributed to employees.
That email said ‘The plan administrator has determined to suspend lump sum payments under the pension plan … As a result, applications for lump sum payments received on or after July 1, 2002, will not be processed.’
Polaroid spokesman Skip Colcord, told the Globe the first e-mail from the human resources manager wasn’t an ‘official communication’ from Polaroid to pension plan participants.
‘When we convey information about the pension plan, it has to be done in a uniform manner and it has to be done to all participants in the same way at the same time,’ he said.