Chump Changed

The pay was low, but working for Ma Bell meant a worry-free retirement. Now Qwest is sending out the pension checks, and local retirees say they're getting the wrong number.

At its core, Zach's problem is that the company she receives her pension from is no longer Ma Bell. In the old days, the pension would have been just as untouchable as she and other employees were led to believe. Although it was technically a private company, AT&T was carefully watched by governmental agencies. There was, after all, only one phone company, and its rates had to be approved by the government. That meant lower take-home pay for the workers, yet it ensured that the nation's phone service would stay up and running.

But Zach didn't retire from AT&T. In 1984 her lifelong employer, Northwestern Bell, became U S West, and the rules changed. Instead of an untouchable investment account, the pension fund became one more column in the accounting ledger of a giant corporation that's focused on the demands of its stockholders, not the needs of its workers.

And then in June of last year, U S West was bought by Denver-based telecommunications company Qwest, a corporation that had absolutely nothing to do with Ma Bell's tradition of promising employees better benefits and retirement plans as a tradeoff for low pay. Some 48,000 retirees would now be dependent on Qwest's management of the pension fund. Many of them--including Zach--began to have their doubts that their pensions would remain intact after the $85 billion merger was completed. They were told there would be no increases in the size of their pension checks, nor would they get financial help if their health-care costs rose. Never mind that there was plenty of money in the retirement account.

Craig Lassig

In fact, at the time of the merger, there was a surplus of $5.7 billion in the $15 billion pension fund. Given the way the money had been handled by U S West, Qwest's refusal to commit to a more generous plan, and the weakness of the federal laws that protect people who depend on private pension funds, the retirees feared that their fund would be tapped to pay Qwest's operating expenses, bolstering the company's bottom line.

Another U S West retiree, Nelson Phelps, notes that there are plenty of reasons that a corporation would rather keep a surplus than distribute it to pensioners. "U S West made a lot of money very quickly through managing the pension smartly," he opines. "They look like a profitable company because the stock is valuable, and the stock options are there for current employees, but it's just paper profits to the retirees. All we are asking for is that they share the money they've made off the pension. We are just asking for a couple of crumbs."

It's impossible to say whether Minnesota's newest telephone-service company plans to do anything to resolve the concerns Zach shares with other U S West retirees. Qwest managers referred repeated interview requests for this article to the company's Twin Cities spokesman, who will say only that Qwest is administering the pension plan in accordance with the plan's rules and with federal law.

Shirley Zach knows that the merger, and Qwest's potential appropriation of the pension surplus, is legal. But she also knows that she has very little to show for her decades of service. She feels ruthlessly discarded by her former employer, one that never lived up to its promises of great retirement in exchange for company loyalty. "The money in that fund--it's ours," says Zach. "We worked for it and let the company keep it. They wouldn't have made the money they have now without us."


On a crisp weekday afternoon in December, about 70 former and current telecommunications employees mingle in the upstairs banquet room of Jax Cafe in northeast Minneapolis. The occasion is an annual holiday party, one that, for ten years, has drawn a tight-knit group of former Northwestern Bell employees, some of whom started their careers more than fifty years ago.

Concerned about their pensions, a group of those retirees nine years ago organized the U S West Retiree Association. It has become increasingly vocal and well organized in recent years, now boasting more than 45,000 members, who worked in such far-flung places as Washington, Colorado, Utah, and Arizona, as well as Minnesota and the four other Northwestern Bell states of Iowa, Nebraska, and the Dakotas.

The air of nostalgia suits the elegant 1920s décor of Jax, but as the party begins to wind down, melancholy sets in. Marian Hauck and Arnie Albrecht, both of whom have been active with the association, nestle into a couple of chairs at a large table in a corner of the banquet room. Both are reluctant to talk, for fear of claiming the spotlight personally, but it's clear that neither thinks anyone who worked for U S West and wasn't upper management is getting a fair shake.

"None of us ever dreamed that the telephone company wouldn't make good on its retirement promises," says Hauck, a former Northwestern Bell and U S West employee from St. Paul. "The culture then was that we gave things up for the company because we cared, and we believed whatever they told us when we walked out the door. Now employees don't care about the company. It's all a personal agenda now. And the company doesn't care about us, about the money we earned, and the handshake agreements that were made."

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