RETIREES READY TO BATTLE OVER HEALTH CARE BENEFITS
The pension funds controlled by BellSouth, Qwest, SBC and Verizon remain among the most financially sound in the U.S. despite the respective companies' 15-year hiatus from contributing to them. However, reports about potential fallout from shortfalls in those funds have compounded retirees' fear that their best-laid plans for a secure retirement are evaporating in a mist of corporate greed, mismanagement and an uncaring Congress.
The Employee Retirement Income Security Act (ERISA) requires companies to keep pensions funded and guarantees that retirees receive the same pension benefit they were eligible for the day they retired. However, a provision for health care benefits was removed before ERISA was passed in 1974.
“For a number of years there has been a gradual, almost imperceptible erosion of health care benefits,” said Jim Norby, president of the National Retiree Legislative Network.
Last month BellSouth announced it expected as much as a 13¢ per share impact on 2003 earnings due to pension and post-retirement benefits costs. Portending the potential threat to retirees, BellSouth Chief Technical Officer Ron Dykes said recently that the company is forecasting a sharp increase in medical expenses for post-retirement benefits in 2003.
Whether the company or its retirees absorb that cost, or whether it will be shared, is still unclear. However it is becoming clear to retirees that without legislative protection, the burden will increasingly fall to them.
The Emergency Retiree Health Benefits Protection Act (HR-1322) — an amendment to ERISA designed to do for health care what ERISA did for pensions — was introduced to Congress by John Tierney, D-Mass., prior to this past election. But the new Republican majority in both congressional houses will make it nearly impossible pass.
“HR-1322 will have to be re-introduced,” Norby said. “But we have a series of petitions with tens of thousands of signatures supporting that legislation, and we're waiting for a huge press conference where we will spring it.”
One industry expert said retired RBOC employees have nothing to worry about and that, provided Qwest turns itself around, the rest have plenty of cash to cover pensions.
“I don't foresee them having to cut benefits for pensioners. They'll just save as much as they can by laying off workers,” said Pat McGurn, vice president and director for Institutional Shareholder Services.
Surprisingly, Qwest retirees appear least worried of all. After reaching a settlement in a lawsuit brought by Nelson Phelps, the now retired executive director of human resources at the former U S West and current chairman of the Association of U S West Retirees, Qwest guaranteed all health care benefits for retirees who left the company prior to 1992 — about 90% of all retirees to date.
Phelps said his family accumulated $57,000 in health care expenses this year, but that he paid only $162. “That's pretty damn good coverage. We love the corporation, but unfortunately we had to sue to get it,” he said.
There is also a bit of a love fest occurring between U S West retirees and the new Qwest management. “It's brighter here than it has been in years,” Phelps said.
Not all relationships are as chummy. “Our relationship with Verizon is very business-like. There is nothing hostile going on here,” said Bill Jones, president of the Association of BellTel Retirees. “We obviously have issues with them that we continue to voice, but we do it in a business-like fashion.”
Issue No. 1 is the tremendous erosion of buying power of pensions, Jones said. His organization was founded because of concern that retirees had not received a pension increase in several years, despite company executives “making more and more and more regardless of what happens to the earnings of the company and shoveling money into their pockets at an obscene rate,” Jones said.
The decrease in the pension fund has made it virtually impossible to get an increase, Jones said. And the real issue is the virtually transparent and gradual deterioration of health care benefits.
“It's a sad situation that as people age, they need their health care more and more, but now it's being scaled back,” Jones said. “People are cutting pills in half and, in some cases, going without their medicine altogether. It's dangerous, but that's what people are faced with.”
Jones said that several companies, not just RBOCs, have been complicit in scaling back health care benefits and that Congress needs to address the problem. “The health care system is in a shambles and Congress has to step up and do something fast,” Jones said.
RBOC PENSION FUND STATUS
Despite not contributing to their pension funds since around 1987, large surpluses still pad incumbent accounts. But can they last?
|BellSouth||$ 16.6||$ 11.9||139.5%|
|Qwest||$ 11.1||$ 9.6||115.5%|
|SBC||$ 32.7||$ 25.1||130.3%|
|Verizon||$ 48.6||$ 36.4||133.4%|
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