Qwest Cuts Benefits, Raises for Management

As of Jan. 1, management workers at Qwest Communications International Inc. (Q) will start to feel the penny-pinching their subordinates have been dealing with for the past two years.

The Denver-based RBOC on Monday said it will not provide any future pension benefit accruals for active management employees under its pension plans. It also will not pay merit increases to managers next year.

“It is important for us to reduce costs, in part through the steps we are taking with the pension and management salaries, yet maintain competitive benefits and compensation for our employees,” Ed Mueller, chairman and CEO of Qwest, said in a prepared statement late Monday. “By continuing to match employees’ contributions to our 401(k) plan, provide solid health benefits and not reduce salaries, we believe we are better positioned for future success.”

Qwest expects to save about $60 million by changing its pension-plan contributions. The salary freeze should save about $35 million in 2010. Plus, with changes to workers’ health plan and life insurance benefits, Qwest hopes to save a total of $100 million throughout all next year.

Retirees, former employees and employees covered by collective bargaining agreements with the Communications Workers of America and the International Brotherhood of Electrical Workers are not affected by Qwest’s changes.

Qwest also noted that active management employees who participate in the company’s defined benefit pension plan will keep their accrued pension benefit, as earned through Dec. 31, 2009, and are eligible to receive their vested accrued benefit when they leave Qwest.

The provider on Oct. 28 reported its third-quarter earnings, which disappointed with lower profit and sales.

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