Because, as mentioned above, this was an old-school company. Departments had budgets, and your labor budget was fixed and pretty much determined how many people you could have.

That retiree on 'vacation' was drawing a paycheck and was still part of your yearly budget. Asking for a replacement meant increasing the budget by that extra person's salary, and that was a bureaucratic problem.

Oh, and here's the fun conclusion to the story I forgot to mention. When the policy was cancelled and rollover was taken away, every employee got paid a one-time lump sum for their accrued rollover time. Some people got 30-40 weeks of pay in a single check. And that launched many employees into a higher tax bracket for that year. Lots of fun all around.