During 29 years as a pipeline unit operator Lauren Titus has never seen a change in retirement programs so massive that it drastically affects the retirement plans of hundreds of employees as the one currently in the works at Western Refining.

The company has initiated the termination of the longstanding annuity pension plan for 50 percent of the refinery’s almost 500 employees, Titus said. A steward of the International Union of Operating Engineers Local 351, Titus said that as stock values fell over that last year, the amount of money in the annuity fund also dropped. “So, for Western to fully fund [the annuity], it was going to cost them quite a bit of money.”

After multiple requests, Western Refining declined to comment. This company and its employees, however, are not the only ones dealing with this problem.

“Western Refining is not unique in doing this. There is a large number of corporations domestically and over-seas that have discovered that old-style pension programs don’t work [during a recession],” said Dr. Thomas Fullerton, professor of economics at UTEP. “And it’s no surprise that they did so because otherwise they would have slowly eroded their competitive edge.”

According to a survey by CareerBuilder.com, a website devoted to career development, nearly 38 percent of 3,000 human resource professionals and hiring managers plan to cut back on various benefits including retirement benefits.

Moreover, this trend seems to coincide with a decrease in employee confidence in the United States. According to the Pew Research Center for the People & the Press, in February 2009, roughly 20 percent of workers of all income levels fear that their retirement benefits may be cut or terminated like the refinery workers’ annuity.

“By law, they could terminate the plan and pay us off, and in doing that it would be fully funded, but they would pay us off with a lump sum,” Titus said. The company plans to pay a lump sump to each employee who will be removed from the annuity program, which will ameliorated the pain for some workers, especially the younger ones. However, Titus said that even earning “five to 10 percent per year” on private investments would not result in the same benefit that the annuity yields.

“In the long run, [401(k) investments] could be beneficial to the guy who’s at 40 versus a guy like my age at 60. Once, I get [the lump sum] and try and put that it in the market, it’s not going to do as well,” Titus said. “I don’t have that much time to let that investment build, even if I could get five percent.”

The union could have fought the change because maintaining the program was not entirely impossible, Titus said. but it would have been more costly to the union membership. “If the [union] sits there and says, ‘Okay, you guys, we all have to vote to open a contract and possibly go out on strike,’ it can pit the two sides against each other,” Titus said.

According to Fullerton, it is especially hard for unions to effectively renegotiate contracts of this magnitude in the current recession. “In general, as the economy sours, it’s more difficult for labor groups to renegotiate contracts,” Fullerton said. “They have to be more flexible.”

Although no new contracts were proposed, Western mechanic and union member Rolando Escobar said the contentious nature of the situation caused some union members to lose faith and he hopes they keep things in perspective.

“For the most part, about seven percent of those people affected, unfortunately, put blame on the union,” Escobar said. “I’d like to see hopefully time heal this wound and [let] those that left the union realize where the real problem lay and come back to the union.” Even though Escobar has been with the company for five years and gained money due to a minor increase of company contribution to 401(k)s, he said he sympathizes with those who will lose large amounts because of the annuity’s demise.

“By [realizing] what they were anticipating when they would retire and what they were going to be getting, I myself would have been very upset by seeing only fractions on the dollar,” Escobar said. “Human nature is to become emotionally affected by that. Some people planned a future retirement and now all of a sudden that’s not going to happen.”

Even so, in Titus’s eyes, the loss of the annuity plan was defensible because he and many other employees did not lose their jobs.

“When you have something that could destroy the company by having it shell out millions of dollars for annuity and you look at how you can negotiate, [you ask] can we try and force the company to pay that? Sure we can, but if the company goes under, now what have we got? We’ve lost our jobs,” Titus said.