Benefits January 8, 2003

Lucent Disconnects Death Benefits

January 8, 2003 (PLANSPONSOR.com) - As many as 31,000 Lucent Technology retirees will see their death benefits eliminated, as the struggling telecommunication company continues to cut costs, according to a report by the Asbury (NJ) Park Press.
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The loss of the death benefit, scheduled for February 1, amounts to a year’s salary at the time of retirement and will apply to Lucent managers who retired before January 1, 1998. Under the current system, the benefit is payable only to a surviving spouse, unmarried children under age 23 and dependent parents.

However, life insurance, paid for by the company, and pension benefits are not affected, Lucent spokesman John Skalko said.   “Life insurance has become more pervasive, and more companies have eliminated the death benefit.   A death benefit today is unusual among our competitors.”

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Skalko said the death benefit was first instituted in 1913 before life insurance was generally available. Lucent’s life insurance policy pays a death benefit of one year’s salary until age 65 and is then reduced by 10% every year until age 70, at which point it stabilizes.  

Further, the move to eliminate the benefits was necessary in Lucent’s continued quest for profitability, Skalko said.   “We have to take those steps that we believe will assist us in returning to profitability as soon as possible.   We owe that to our employees, our customers and our shareowners.”

The death benefit has been eliminated before.   In 1997, Lucent eliminated the death benefit for management employees who retired on or after January 1, 1998.  

Lucent is now looking to cut costs anywhere executives can find them as revenues drop. Past cost-cutting measures have included tens of thousands of layoffs. In October, the company said it would lay off another 10,000 employees by September 30, bringing the number of employees down to 35,000.

Benefits January 7, 2003

GE Workers Threaten Strike over Health Care Costs

January 7, 2003 (PLANSPONSOR.com) - In response to rising health care costs, 14,000 members of General Electric's (GE) International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America (IUE-CWA) union will go on strike just after midnight on Tuesday, January 14, according to a press release.
Reported by

The strike, set to last until midnight January 15, is due to GE’s increase of health care co-pays for workers and pre-65 retirees in its managed care plan.   Additionally, the union said the strike is intended to serve as a deterrent to GE’s stated plan to seek “substantial” increases when national union negotiations start in May 2003.

According to the release, from 2000 to 2001, GE’s costs in its managed care plan increased by 9.7%, while workers’ co-premium costs jumped 16.0%. In a single year, GE will have shifted $43 million to $57 million in costs onto workers and retirees. At the same time, GE’s total health care costs, as a percentage of profit, were lower in 2001 than in 1999. The union said this translated into nearly 145,000 families being hit with the cost hikes January 1.

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The strike will impact 48 locations in 23 states working in GE’s appliance, lighting, power systems, aircraft engine, consumer and industrial repair, industrial systems, plastics and transportation businesses.

“IUE-CWA is taking on the fight for affordable health care for all GE workers, including unrepresented workers,” said IUE-CWA President Edward Fire. “GE has provoked a strike through its greed. A company that sets record profits each year, $14.1 billion in 2001, can afford to maintain health benefits without forcing workers and retirees to pay more.”

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