Unlike death and taxes, promises of retirement benefits certainly change

If you hold a job you enjoy, count yourself among the lucky. And a very happy Labor Day to you.

But in today's changing world, you'd be foolish to count on your retirement benefits actually being what you anticipated.

The era of the benevolent company caring for its retirees in their golden years is more myth than fact these days. Social Security is on wobbly legs. Your retirement benefits can be changed whenever the company wants, and there's nothing you can do about it.

Nancy Foster worked for the local telephone company for more than 33 years, first when it was Centel, then Sprint. She took early retirement in 1997 rather than move from Nevada to Kansas, knowing her pension would be smaller. Sprint said the retirement program still would provide medical benefits and $25,000 in life insurance benefits.

Sprint became Embarq last year and recently told the retirees old enough for Medicare that, as of Jan. 1, Embarq will no longer be providing supplemental medical benefits to Medicare-eligible retirees like Foster, who was a senior engineer when she retired.

"In essence, what they are telling you is: 'Go find your own supplemental insurance, old person,'" Foster said.

The company also capped life insurance benefits at $10,000, a $15,000 cut for Foster.

"I know I can't change it," the 67-year-old woman said. But it doesn't make it any more palatable.

Ned Holland, senior vice president of human resources for Embarq at the company's Overland Park, Kan., headquarters, said Friday the company is in "blood-curdling competition" with cable companies and is losing 5 percent to 6 percent of its customers a year.

In Clark County, Embarq and Cox Communications are in a ferocious competition for customers wanting phone service and Internet access.

Unless Embarq wants to join financially troubled industries like steel and the airlines, it must cut costs to stay competitive and keep jobs secure for its current employees, Holland said.

The phone company operates in 18 states and has about 14,000 retirees. The cuts are expected to save $30 million a year. (Please, don't let them use the savings to buy more of those annoying singing television ads.)

When people such as Foster went to work for Centel, phone companies were regulated monopolies with guaranteed rates of return, Holland said.

Telecommunications is an entirely different industry today, yet Embarq is still regulated by the state.

For those worried about being able to obtain supplemental insurance, Aetna Insurance will provide policies, even for retirees with pre-existing conditions. "One-third of our retirees will pay less for their premiums" with Aetna than they were paying under Embarq, Holland said.

Embarq notified the retirees in a letter July 26. Another letter telling about the Aetna option went out last week, so retirees will be able to calculate what their financial hit will be and whether Aetna or another company offers them the best option.

Foster now pays $10 a month for her Embarq premium for supplemental insurance, and the quotes she received from a few companies would have her paying $160 a month for the supplemental coverage.

But she was cheered late Friday when Aetna told her the premium would be based on length of time with the company and the position.

"It's guaranteed coverage regardless of medical history," she said. "Maybe it's not as bad as I thought."

There's a generation of workers who started their careers and stayed with one company for decades. They felt they were loyal and that their loyalty would be repaid in their golden years.

"Why punish us who have made this company what it is?" Foster asked, echoing the voices of many others.

This is a national trend; it isn't just Embarq. Only 19 percent of companies offer medical benefits to retirees today.

As more businesses take this route, more retirees will be facing the same questions and have the same concerns that Nancy Foster and other Embarq retirees are stressing over.

It's a warning to all of us who are still working that promises made are not always promises kept. And that you need to ask yourself if you are saving enough for retirement, especially your health care costs.

Most likely you aren't.

Jane Ann Morrison's column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call 383-0275.