The Association of U S West Retirees



Qwest retiree benefits dwindle
By Jeff Smith
Rocky Mountain News
Saturday, December 16, 2006

The Denver telco recently announced life insurance benefit cuts affecting all 48,000 retirees and health care cost caps affecting 9,000 retirees.  Angry retirees have responded by sending hundreds of letters to CEO Dick Notebaert and his board of directors.  The Association of U S West Retirees also is considering litigation on aspects of the life insurance issue.  Qwest, which is continuing to look at cutting costs throughout its operations, has maintained that it needs relief to be more competitive and notes that most companies nationwide don't even provide health care benefits to retirees.

Kaiser Family foundation reported this year that the percentage of U.S. companies providing health benefits to retirees has declined from 66 percent in 1988 to 35 percent.

And this week, Kaiser/Hewitt said U.S. companies continue to shift costs to retirees.

"My only observation is that the (telecommunications) industry talked about price caps 17 years ago," Notebaert said in a telephone interview this fall.  "And we're not nearly as profitable as our peer group.  Nobody should have been surprised.  How many companies do you know provide life insurance for retirees?"

But U S West/Qwest retirees counter that they are being asked to make concessions at a time Qwest has rebounded, generating more that $1 billion in cash annually, and top executives are cashing out huge chunks of their stock options.  Top executives recently made more than $50 million combined exercising their options.

The retiree question the equity of the cuts.  They also argue that Qwest is shifting the burden of increasing health care costs to them without fully using its influence to lobby for health care reform.

"I agree (retiree health care cuts) are happening in a lot of places," said Jack Ott, a 66-year-old former engineering planner who retired in 2000.  "But I feel kind of let down.  I think it's a slap in the face to elderly people who made plans to retire on a certain income and now they're losing that."

While Qwest may be within its legal rights, "I think it's an ethical issue," Ott said.  "Companies made promises to people, and (based on that) a lot of people made decisions to stay with a company."

Qwest is blocked by a court agreement from cutting the health care benefits of pre-1991 retirees.

So far, the Communications Workers of America has deflected large concessions among union retirees.  But 9,000 port-1990 nonunion retirees have been paying at least 20 percent of their health care premiums since 2004 and starting Jan. 1, Qwest will cap its contribution to those premiums.

Qwest also is slashing life insurance benefits for all 48,000 retirees to $10,000 each effective Jan. 1.  Previously, the benefit was equal to the final year's salary, with that declining to 50 percent at age 70 for some retirees.

Qwest does pay a large amount of money for retiree health care costs -- $383 million in 2005 alone, according to a federal regulatory report.  But that actually represented a decline from $391 million in 2004.

Also, the regulatory report indicated Qwest received $26 million in premium sharing from nonunion retirees, $206 million from a union health care trust and $38 million from Medicare.

Qwest refused to elaborate on the regulatory filing, provide estimates on the cost savings it hopes to achieve, or otherwise comment for this article.

A number of nonunion retirees recently talked to the Rocky Mountain News about how they would be affected by cuts in their benefits.

While many earned good salaries at the company and don't expect immediate changes in their lifestyles, they say the cuts already have or could have a significant effect on their retirement and what they can pass on to their children and grandchildren.,2777,DRMN_23910_5217998,00.html