Posted on 09/22/2004 8:28:35 AM PDT by lelio
For the second time in a year, telecommunications equipment maker Lucent Technologies Inc. is reducing benefits promised to thousands of its retirees.
The Murray Hill-based company, which reported billions of dollars in losses during the telecommunications industry slump, notified employees by letter it will no longer provide free health insurance for dependents of management workers who retired on or after March 1, 1990, at a salary of $65,000 or more. Instead, those dependents will have to pay their own premiums.
Last September, Lucent announced identical cuts for managers who had retired during the same period but had a base salary of at least $87,000. That change took effect on Jan. 1.
The latest cut affects the dependents of 5,400 management retirees, a total of 7,400 dependents - spouses, disabled children and children age 23 or younger living at home. It takes effect Jan. 1, 2005.
The prior cutback affected about 9,000 dependents of 7,300 retirees.
"We're astounded that the Lucent executives would continue to take benefits away from dependents of retirees, since many retired based on Lucent's promise to provide health care benefits for them and their dependents," Ed Beltram, spokesman for the Lucent Retirees Organization, said Tuesday.
Lucent spokesman Bill Price said the company had no choice.
"We have to ask for some cost sharing, as we did last year, with our retirees in order to remain competitive," he said, noting dependents could stay in the retirees' health plan by paying their own premiums. The premiums range from $220 per month to $386 per month, which Price said was about half the cost of comparable coverage elsewhere.
Management retirees' costs for dental coverage also are being increased, with premiums rising roughly one-third to $32 per month for single people and $85 a month for family coverage.
The new changes should save Lucent about $16 million annually, Price said. The prior cuts are saving about $75 million a year.
About 40 percent of Lucent's roughly 50,000 management retirees - those who retired before March 1, 1990 - do not pay premiums toward their health insurance. The rest pay on average $90 per month, if single, and $226 per month if they have dependents, according to Price.
Two weeks ago, Lucent said it also would try to reduce future health care costs for its retired union workers when it begins negotiating a new contract with their unions. Bargaining is set to start in early October.
Ken Raschke, president of the Lucent Retirees Organization, said it was hard to justify the cuts when Lucent's chief executive officer, Patricia Russo, received a total of $44 million in compensation in 2002 and 2003.
Price said the compensation figure is deceptive because it is based on how Russo's stock options are valued. He said Russo's compensation for her first two years at the helm actually was $35.6 million and includes $18.2 million in hiring incentives to make up for money she lost by leaving Eastman Kodak to join Lucent. Also, he said, her stock options are worthless because the stock is trading for a lower price.
In afternoon trading on the New York Stock Exchange, Lucent shares were up 5 cents at $3.34.
Wake up America!
Social security and pension plans are MARKETING PLOYS. Social Security was NEVER meant to last this long. Pension plans are meant to entice workers into accepting lower wages. However, they were never meant to last this long either.
Everyone should assume that any pension program will be defunct or cut back dramatically over the next ten years.
Same applies to healthcare!
These Lucent retirees are luckier than they know. My health care policy, which we paid for in total while he was alive, was cut off 60 days after his death. I now pay about $2,000 a year for ONE person, and it doesn't include prescription or dental benefits. At lease the Lucent retirees can stay under the company umbrella, and probably get prescription benefits.
Ping
Health costs are becoming monstrous for all, companies and individuals alike.
And about 1/3 of the premium is going to pay off trial lawyers...
Pensions are the biggest scam.
Ever read the fine print "Management reserves the right to discontinue the program at any time, without notice".
In other words, get the cash, get vested, and walk away somewhere else - at least you have something, which will be more than the suckers who stick around.
If you worked for many years for a salary over $65,000 a year than putting out $4,000 for health insurance does not seem outrageous.
It doesn't take a genius to figure out that the long-term prognosis for a company isn't very good if it has to carry enormous long-term expenses on its balance sheet for people who don't even work there anymore.
Your reasoning scares me.
I've heard soooo many stories of squandered opportunities due to mis-management, waste and abuse by employees and overall lack of financial responsibility. Not surprised by this at all.
I've always felt that any conservative with an entreprenurial spirit would never feel comfortable working for a company with more than 25 employees. As far as I'm concerned, there really isn't much of a difference between Big Business and Big Government.
the carly fiorina legacy continues - she's off destroying HP now, while pocketing 8 figure compensation every year.
And day after that is when the governemnt takes over health care.
you are correct, corporations across the board are dumping pension and medical.
but this is also why, absent a strong sensible proposal from the republican party on MSAs and portable retiree medical plans that include a mandate for corporate contributions (yes, that's right) - universal health care coverage is coming to the US, and a Dem candidate is going to be able to ride that to the white house unless our party wakes up.
reading my mind - see post #15.
there is a way to handle this privately, but our party is not out there with any ideas. every worker in the US should have a 401K style plan for retiree medical - and yes, corporations should be REQUIRED to pay a contribution into them to match the employees contribution. Similar to a 401K. The plan is portable, so if I work 10 years each at 3 different companies, I have 30 years of both my and my employers contributions to use for retiree medical. I don't rely on any of my employers to provide retiree medical, under qualification rules that they can change or alter at any time.
absent that, workers are just going to throw up their hands and opt in for a government funded system.
oh, and following in carly's footsteps is:
"CEO Patricia Russo, received a total of $44 million in compensation in 2002 and 2003."
just unreal.
You're planning well. Very forward thinking, and very unlikely to be followed by any meaningful percentage of Americans. Universal care is coming, and don't be surprised if its a Republican who delivers it.
That doesn't have to be the case. Most Americans make their own arrangements as far as food, shelter, and transportation are concerned -- and I don't hear a loud cry for 100% government ownership of grocery stores, homes, and automobiles.
I see no reason why corporate contributions should be required. In fact, under the scenario I posted there wouldn't be anything beyond a simple contractual relationship between a corporation and its contractors.
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