Verizon unifies pension plans

  • Mike Benbow / Herald Writer
  • Wednesday, June 20, 2001 9:00pm
  • Business

By Mike Benbow

Herald Writer

Verizon unveiled its employee retirement package this week, a combination of old and new it described as among the best in the business.

The communications giant was forged nearly a year ago in the merger of GTE and Bell Atlantic. Verizon employs some 260,000 people, including 2,000 in Snohomish County, which hosts its Northwest headquarters.

"We wanted to have one overall management benefit plan so people would view themselves as a Verizon employee, not a former GTE employee or former Bell Atlantic employee," Ezra Singer, executive vice president of human resources, said Wednesday.

The plan, which comes at a time when many companies are jettisoning pension plans and retiree medical benefits to cut costs, includes both those elements as well as a 401(k) retirement program.

"We wanted to continue doing all those," Singer said. "We did not look at this as a cost-cutting exercise. Nor were we looking to add extra costs."

Singer said the company is among the top 25 percent of the nation’s top corporations and aims at attracting and retaining "the best employees out there."

The new plan covers managers and other salaried employees. Union workers have their own contracts.

Singer said the plan is divided into two parts, one for employees with less than 10 years on the job and one for employees with 10 or more years of service.

Newer employees get:

  • A cash balance pension. The company will contribute between 4 and 7 percent of a worker’s salary each year, based on age and years of service, to a pension fund. Once vested, employees get the money when they leave.

  • A 401(k) program where employees can put in a percentage of their salary to grow tax-deferred for retirement. The company will also contribute up to 5 percent of a worker’s salary for those who put in 6 percent on their own.

  • A retiree medical program in which the company will pay a percentage of the insurance premium based on tenure for people who work there at least 15 years. A 30-year worker would have 80 percent of the premium covered. The company will continue to cover premium increases until 2008, when it will put a cap on its contribution. With the cap, it will cover any annual increases in excess of 15 percent to protect employees against dramatic price hikes.

    Employees with at least 10 years service get:

  • The same retiree medical program and 401 (k) plan.

  • A choice between the new cash balance pension or the old pension plan, which was based on the five years of highest earnings.

    Singer said cash balance programs tend to be better for employees who don’t stay until retirement because they get more early on and they can take the money with them when they leave the company.

    He said a special retirement calculator on the company’s intranet Web site will help employees decide whether the new or old pensions are better for them.

    Many companies are shifting to cash-balance plans from traditional pensions because they eliminate the high costs linked to a sharp buildup of benefits in an employee’s last few years.

    Verizon Northwest employees in Everett got their first look at the plan Tuesday. Singer said more meetings are planned to explain the benefits and answer questions and that a corporate benefits expert will be visiting with workers here soon.

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