Verizon to freeze defined-benefit pensions for 50,000 managers

The company said that after June 30, the affected employees will no longer earn pension benefits or receive additional credits toward subsidized retiree medical benefits. Although current Verizon managers who retire will collect benefits as expected, the move means that those benefits will be frozen at current levels. This means an employee who has worked 20 years for the company will receive the pension benefits of a 20-year employee, regardless of how long he or she continues to work there.

This could prompt some workers to take early retirement, for which they would qualify if they have worked at least 15 years and their years of service and age add up to 75 or more. After June 30, 2006, affected managers will stop earning benefits and receive no additional credit toward the company’s subsidy of retiree medical benefits.

At present, Verizon pays 50 to 80 percent of the health care premiums for retired workers who have worked 15 to 30 years at the company. After July, workers who do not have 15 years of service will never become eligible for retiree medical benefits.

While the decision does not affect Verizon’s 100,000 union employees, this will no doubt change as contracts expire and are renegotiated.

The dismantling of pensions and health benefits in the US is at an advanced stage. Over the past decade, 50 percent of pension plans in the US have been lost, according to the American Benefits Council. These have mainly been in older manufacturing or airline industries suffering severe financial difficulties and bankruptcy. Such was the case with United Airlines in May of this year, when a federal bankruptcy judge ruled that the company could default on its pension obligations and turn over control of its pension funds to a federal agency, the Pension Benefit Guaranty Corporation (PBGC), which is limited to a maximum payment of around $45,000 a year for retirees.

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http://www.wsws.org/articles/2005/dec2005/veri-d08.shtml