Army agrees to fund Holston Defense retirees' benefits

Posted on October 26, 2006

After supporting America’s defense effort for years, retirees of Holston Defense Corp. are getting a show of support in return. The U.S. Army Contract Adjustment Board announced Tuesday its decision to recommend $90 million plus a 5.25 percent adjustment for lost investment return to fund the benefits of Holston Defense retirees, former employees and survivors. The decision marks a major step in ensuring that HDC retirees maintain their benefits. The recommendation now goes to Congress. The announcement was made jointly Tuesday afternoon by U.S. Sens. Bill Frist and Lamar Alexander and U.S. Rep. Bill Jenkins. “Holston’s retirees earned these benefits through years of hard work. We’ve fought tirelessly for this funding over the last two years, and I’m pleased the Army made the correct decision,” Frist said. HDC sent a letter in July to about 1,800 retirees, former employees and their survivors alerting them that some of their benefits — including medical, dental, life insurance and survivor income — could be in jeopardy. HDC, a subsidiary of Eastman Chemical Co., served as the operating contractor of Holston Army Ammunition Plant from World War II until 1998. During that time, the Army reimbursed HDC for contributions to a trust account designed to fund employee benefits. Those reimbursements stopped coming when HDC’s contract to operate the munitions facility expired in December 1998. HDC submitted a request to the Army, asking it to provide additional funds to cover the benefits. But to date, the Army has not provided the additional funding, and the trust account is being depleted. Frist, Alexander and Jenkins have been working with Eastman since late 2004 to address the issue. The legislators sent letters in December 2005 and again in May 2006 urging the Army to expedite consideration of the matter before the retirees’ benefits expire. Depending on the number of claims against the fund, the trust account could run dry in just a few months without the additional funding. Congress is expected to consider the Army’s recommendation and render its decision before the end of the year. Under previous law, the Army’s decision could not be implemented until Congress had 60 days in session to review it. But Frist and Alexander worked to change the provision to 60 calendar days, trying to ensure that HDC retirees keep their benefits. “The Army is doing the right thing in making sure that nearly 2,000 Tennessee retirees receive the benefits they earned. We’ve been working on this for a long time, and I’m glad the Army has finally reached a decision to fund these benefits,” Alexander said. “This decision is long overdue, and I am pleased that the Army has listened to voices of reason and moved to maintain the benefits that retired workers of Holston have earned,” Jenkins said. “The retirees have been unfairly sitting on pins and needles for months now, and I’m pleased that work done by Eastman/Holston Defense Corporation and my colleagues in the House and Senate has finally reached a favorable conclusion.” Eastman spokeswoman Betty Payne said HDC’s board of directors is pleased with the Army’s decision. “The Army has made its recommendation. Now we await a decision by Congress,” Payne said. If Congress approves the recommendation, HDC retirees, survivors, dependents and employees on long-term disability will see no interruption in their medical, dental, life insurance and survivor income benefits, she said. “We are grateful to Tennessee’s U.S. Senators Bill Frist, Lamar Alexander and Congressman Bill Jenkins, along with Virginia U.S. Senator George Allen and Congressman Rick Boucher, and U.S. Senator John Warner for supporting our funding request. Their support was instrumental in bringing this to a favorable resolution,” she said.