Firms Give Reservists Generous Benefits

Sept. 26, 2001 -- Times may be tough economically, but many military reservists gearing up for active duty can look forward to some financial relief.

As tens of thousands are called up to serve, many companies are offering them benefits packages that are more generous than federal regulations require. Those on active duty can also look forward to some loan relief from financial institutions and the government.

Some of the financial breaks reservists will receive have been standard practice for years. But observers note that many companies have become more generous in their efforts to ensure their reservist employees' financial well-being while on active duty.

"We saw some of it in the past, but not like this," remarks Maj. Debra Stewart, deputy public affairs director for the National Committee for Employer Support of the Guard and Reserve, an agency that promotes cooperation between military reservists and their civilian employers.

"I believe it's because this was a direct attack on America, and not something that happened abroad," she says.

UPS Delivers Benefits

Federal law requires companies to hold reservists' jobs for them while they are on active duty. But many companies like Pepsi, UPS and technology service company EDS are offering them additional pay and benefits packages while they are serving the country.

UPS, which counts 4,000 to 5,000 of its 300,000 U.S. employees as reservists, will make up the difference between the employees' military service salary and their salary at UPS.

The package delivery firm will also extend its health care and life insurance benefits to its reservist employees while they're on active duty. Under current regulations, reservists and their dependents get military health care for active duty of more than 30 days.

UPS spokeswoman Paula Fulford says allowing reservists to maintain their company health benefits gives them and their families continuity in their health care services and one less thing to worry about while they're on active duty.

"They don't have to go serve their country worrying about financial matters at home," explains Fulford.

Plano, Texas-based EDS will make up the difference between the workers' military pay and their regular pay for a period of 180 days, or six months, with the possibility for an extension should the need arise. EDS also extends its health care benefits to workers during that period.

Pepsi also makes up the difference between employees' military pay and their regular salary for a limited period of time and extends their health benefits while they're on active duty. The amount of time the salary benefits last varies among the company's different divisions, says Pepsi spokesman Dick Detwiler.

Loan Relief

For those reservists not lucky enough to work for one of these companies, they can still look forward to some loan relief that is set forth in the 1940 Soldiers' and Sailors' Civil Relief Act. This act requires banks and financial institutions to cap the interest rate on reservists' outstanding obligations at 6 percent. That includes mortgage loans, credit card debt and other personal and consumer loans.

In addition, legal proceedings against reservists, such as mortgage foreclosures, evictions, repossessions or other default proceedings are delayed while the reservists are on active duty.

Relief from education loans is also in sight — the Department of Education on Monday directed lenders to postpone student loan payments of borrowers while they are on active duty. For military personnel who haven't yet started paying their loans because they are still students or have recently left school, lenders will continue to defer their loans during their military service.

Though this generosity during an economic downturn may be seen as problematic for some firms, industry observers say they don't see this financial good will slowing down.

"There are a great many banks that are going well beyond this," says Irv Warden, associate general counsel for the American Bankers Association. Warden says he's seen some banks allowing reservists to pay off only the interest on their loans while they're on active duty or reducing the interest rate on obligations to below the 6 percent cap.

UPS' Fulford adds that since the company's reservists make up less than 2 percent of its U.S. employees, productivity or profitability doesn't suffer because of the additional benefits. In the packaging company's point of view, extending pay and benefits for these workers is an economical way to foster loyalty among its work force.

"The average length of stay for a full time UPS employee is 15 to 16 years," says Fulford. "They work their whole careers at this company. It's not something that we take lightly."