The Association of U S West Retirees



Qwest retirees lodge protests
By Virgil Larson, Staff Writer
Omaha World Herald
Thursday, November 2, 2006

Phone company retirees picketed Qwest Communications offices in Omaha today to protest a freeze on pensions, a shift of health insurance premium increases to them and a cut in life-insurance benefits.

About 20 men and women who retired from either Northwestern Bell, its successor U S West or the current company, Qwest, walked the street in front of Qwest offices at 1314 Douglas St. with signs protesting Qwest's actions on retiree benefits.  There are about 2,000 retirees from the companies in Nebraska, most of them in Omaha.

The company says that it is doing what other companies are doing to offset the rising cost of health care and that it has no obligation to increase pensions.

The freeze on pensions means that some retirees getting the minimum benefit, $500 a month, will never get more, said Jim Burns, Vice Chairman of a five-state group of Northwestern Bell-U S West-Qwest retirees. Their last increase was in the mid-1990s. At that time about 10 percent of retirees got the minimum benefit, Burns said.

For those who get more than the minimum, the last increase in pension pay of 2.8 percent came in 1996.

Nelson Phelps of Aurora, Colo., head of the 14-state Association of U S West Retirees, a group that has pushed Qwest on retiree benefits, said he did not know how much the average pension check is.

Beginning in January, retirees not covered by union contracts will begin picking up all increases in health insurance premiums. Qwest now pays the full cost of premiums for people who retired before 1990 and shares the cost with post-'90 retirees. The change doesn't affect retirees who belonged to unions; union contracts require the company to pay the entire premium.

Company-paid death benefits, which now amount to what the ex-employee was paid in the last year before retiring, will be capped at $10,000.

Phelps puts the blame for the cuts and caps on Richard Notebaert, Qwest's chief executive officer.

Notebaert announced the changes in an Oct. 14 Denver-area meeting with retirees, Phelps said, and retirees have been seething since. While Notebaert has not agreed with all of retirees' requests in the past, Phelps said, he had been well-regarded since replacing the ousted and now-indicted Joe Naccio in 2002 as head of the debt-laden, poorly performing company.

"They believed Notebaert was an honest man, working hard to turn the company around," Phelps said. "He did do that, but he has sold us out. He has sold out the retirees."

Phelps suggested Notebaert is curbing the retirees' pensions and insurance benefits in a way that will improve his.

The pension fund is fully funded. The company has not had to put money into it since 1986.

Cutting the company's share of health insurance benefits will save it $20 million to $30 million a year, Phelps said, and Notebaert will be compensated for improvements in the company's financial performance.

"The money, in essence, flows out of our pockets into his," Phelps said.

Accounting rules allow companies to treat a reduced liability - future costs of health insurance, for example - as a gain, sometimes letting it fall directly to the bottom line.

Qwest spokesman Bob Toevs said the decision to shift health insurance costs to retirees was a tough one to make.

"These decisions are always difficult," he said. "But here's the thing . . . we're not alone."

Every business is facing increasing health care costs and many are cutting benefits, he said.

Qwest still will be paying a substantial portion of the premiums, Toevs said, and in the case of retirees whose health insurance is protected by union contracts the company will continue to pay the entire premium cost. Union retirees make up more than half of the 48,000 retirees, he said.

Toevs would not disclose the dollar amount of savings the company expects from shifting the increase in premium costs to retirees and capping death benefits.

As for the pension itself, he said there is no provision for cost-of-living increases.

Burns, the retiree official, said that's true. but the company has increased pensions in the past, and other telephone companies that grew out of the old Bell system, such as AT&T (formerly Southwestern Bell) and Verizon, have raised pensions.

Phelps believes the company is obligated by what Northwestern Bell and U S West employees were told.

"All of us, when we went to work, were told salary would be below average," he said, but that pensions, health insurance and other fringe benefits were above average.

"All during our careers, we heard, 'Yeah, you're not making as much as the guy down the street, but you gotta remember your benefits are the best in the world.'

"We consider this a contract."