AUSWR
The Association of U S West Retirees
 

 

 

Qwest cuts retiree benefits
Life insurance, health care hit. The director of a group of retirees calls the changes "heartless" and says the issue may end up in court.
By Andy Vuong, Staff Writer
Denver Post
Wednesday, October 25, 2006

Despite posting two straight quarterly profits and initiating a stock buyback of up to $2 billion, Qwest plans to cut health-care and life-insurance benefits for thousands of retirees.

The Denver-based company also told retirees this month that there will be no future cost-of-living increases in their pensions, said Nelson Phelps, executive director of the Association of US West Retirees.  The last increase was in 1996, he said.

Qwest, which acquired US West in 2000, said Tuesday the company is merely responding to market conditions.

"Health-care costs are rising at an alarming rate for all industries," said Qwest spokesman Bob Toevs.  "The change is simply a response to market conditions -- conditions that are affecting every business and its employees."

The cuts are "heartless" and are "the most significant any retiree has seen," Phelps said.  The retirees association is reviewing options to see whether it can fight the changes in court, he said.

Starting in January, Qwest will require any former management employee or nonunion employee who retired after 1990 to pay any future increase in health-care costs.  Last year, Qwest pushed a portion of premium increases onto the retirees.  Toevs said the company will still cover a majority of retiree health-care premiums after the latest change.

The company also is capping life-insurance benefits for all retirees at $10,000.  Retirees were previously given the equivalent of one year's annual salary in life-insurance benefits.

The changes "would probably put us in line with other companies across a wide swath of industries, including other telecommunications companies," Toevs said.

Other companies that have announced pension and health-care cuts this year include IBM and General Motors.

Qwest and the retirees association disagree over how many people will be affected by the changes.

Toevs said the company has about 48,000 retirees nationwide, and a "minority of that population" would be affected by the health-care change.  Former union employees will still be fully covered for any premium increases.

Phelps estimated that the company has about 50,000 to 60,000 retirees and that about half would be affected by the health-care and life-insurance cuts.  The reductions could save Qwest $20 million to $30 million annually, Phelps estimated.

The company has about 7,000 retirees in Colorado.

Phelps, who has been supportive of Qwest chief executive Rich and Notebaert since he joined the company in 2002, called him a "traitor" Tuesday.

"I think it's heartless," Phelps said.  "I think we've seen the real Mr. Notebaert -- a person who lacks compassion and concern about the very people that built the business that he's now managing and reaping financial rewards from."

Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.

http://www.denverpost.com/business/ci_4544619