Larry and Darlene Redemann looked forward to buying a house on the water in Virginia after Darlene retired from her job as a roller at Bethlehem Steel's Sparrows Point plant.

That was before a federal agency announced this week that it was taking over Bethlehem's cash-strapped pension system.

Now the Dundalk couple don't even know if they'll be able to pay their mortgage and their son's Catholic school tuition.

The Pension Benefit Guaranty Corp. terminated Bethlehem's system Wednesday and said that it would cap pensions at just under $43,000 annually, eliminate supplements and make people wait until age 62 to collect retirement.

While Bethlehem executives and union officials predict that 90 percent of the company's 95,000 employees won't be affected by the change, that still leaves thousands of people like the Redemanns in a financial bind.

The Redemanns are getting hit from both sides.

Larry Redemann, 54, who retired from the Sparrows Point plant in May, is about to lose two-thirds of his $3,000-a-month pension. The PBGC will no longer honor $400 of the pension because it's a special supplement the company gave him when his division was closed. The rest he'll lose because the PBGC is paying pensions based on age, rather than on time served and income.

Darlene Redemann has three years to go before she reaches 30 years at the company, when she could have retired under the old pension system. But PBGC has changed the rules. Now 52, she'll be only 55 when she reaches 30 years' experience, and then will face another seven years until she'll be 62 and eligible to collect her pension.

That means no house on the water anytime soon.

"We're disheartened by it all," she said. "Do we have a Christmas tree up? No. We just can't get in the mood."

Younger workers who have worked at Bethlehem for years will be some of the hardest hit, union officials said. Former managers and supervisors whose pension checks are well above the PBGC cap will also be affected.

3 months away

Gerry Smith, 49, has three months before he reaches his 30 years at the company. The maintenance technician at Sparrows Point had planned to retire and live a simple life, working on projects in the garage. No fancy vacation or big plans.

"Retirement was the big plan," he said.

Now, he's looking at working 13 more years. The family can't pay the bills with his wife's paycheck alone.

"I have no choice," he said. "I can't survive with no money. I'm going to have to work until I'm 62 years old, and I don't even know if I'll live that long."

The irony of the pension change, many Bethlehem employees said, is that many of them came to work for the steel company because of its reputation for good pay and benefits.

Now, they say, it's all being taken away.

"My pension was my incentive to work," said Darlene Redemann. "Me and my husband never miss any time at all. We come to work sick. Now they're going to reward us this way."

34 years on job

John Barr started at Sparrows Point 34 years ago when he was 19. He worked several construction jobs before that but was drawn to Bethlehem by the money.

"They always paid well," he said. "Over the years, I would look around for something better, but nothing better came along. So, I stayed there.

"After I got 20 years, I said I might as well just stay around until retirement."

Barr can collect retirement because he's already been with the company more than 30 years, but he expects his pension to be cut by $700 a month with the PBGC takeover. To make matters worse, his 401(k) suffered a major loss.

"I wouldn't be able to live off of that," said Barr, who is also recording secretary for Local 9477 of the United Steel Workers of America. "I'm upset about it. I had planned to leave in a couple of years, but that won't happen now."

Bethlehem officials could still challenge the takeover. The company has also been negotiating a new labor agreement with the United Steelworkers that could include a new retirement plan.

But workers still worry that on top of seeing their retirement plan weaken, they also could lose their jobs as the financially troubled Bethlehem negotiates a deal to sell its assets to International Steel Group Inc.

Bill Major, 49, came to Sparrows Point in 2000 after the plant he worked at in Bethlehem, Pa., closed. He came to protect his retirement. He would have been five months from retirement under the Bethlehem system.

"I was too close to my 30 years not to come," he said.

His wife and two children stayed in Pennsylvania, and Major sends them money every week. Now he wonders if he could get laid off as well.

"I don't know where I stand," he said. "I could be one of the first ones out the door." Smith also doesn't know what he'd do if he lost his job.

"I've basically worked there my whole life," he said. "I wouldn't know how to get a job anywhere else."