Posted by : trraju on Oct 02, 2003 - 01:32 PM General

SOMERSET, N.J. (AP) - About 750 retired Lucent Technologies managers angry over pared health benefits met with former CEO Henry Schacht on Tuesday, who told them the struggling telecommunications gear maker can't afford to reconsider the cuts.
Schacht, Lucent's pointman on retiree benefits and a member of the company's board, said retiree health benefits now equal about 10 percent of annual company revenues, and retirees and their dependents outnumber current employees 10 to 1.

Lucent announced Sept. 8 it is cutting back on health benefits for about 50,000 retired managers and dependents.

During a nearly three-hour, closed-door meeting late Tuesday, retirees also questioned the compensation levels of top Lucent executives, saying they should share the pain.

``Up until now, we had the funds to cover this. The funds ran out on the management side this year, and they run out the (union) side in 2006,'' Schacht said.

Lucent, which is based in Murray Hill, N.J., has been losing billions each year and has cut about 75 percent of its work force due to a severe industry slump and serious business missteps.

Those cuts include eliminating all dental coverage and reimbursement of premiums for Medicare Part B, which covers doctors' visits, for retired managers and their dependents. Lucent also is ending health care subsidies for dependents of managers who retired at a base salary of at least $87,000 by March 1, 1990, a group that includes about 60 percent of retired managers.

Tuesday's meeting was one of eight scheduled this week in locations around the country where large numbers of Lucent retirees live.

``It's going to cost me $439 a month more,'' said Joe Torrelli, 56, a former information systems manager from Clifton, N.J. ``I'm going to get a job.''

Several retirees in their 50s said they are angry because they were encouraged to take buyout packages as a way to preserve their benefits.

Lucent, which also has about 77,000 union and other nonmanagement retirees, said it estimates the changes will save about $75 million a year. In a Securities and Exchange Commission filing earlier this month, the company said its retiree health costs will total about $850 million for the fiscal year ending Tuesday, up from $460 million six years ago.

Lucent will cut the Medicare Part B reimbursement starting Wednesday and the other changes are effective Jan. 1. 2004, spokeswoman Mary Lou Ambrus said.

Like many other companies, Lucent is paying health benefits for far more retirees than current workers. It now has about 24,000 U.S. workers, compared to 127,000 retirees and about 113,000 dependents.

Lucent came into existence Sept. 30, 1996, when it was spun off from AT&T. It inherited responsibility for thousands of retired AT&T workers who had been in business units that became part of Lucent, some of whom had never worked for Lucent.
The company said those workers, ranging from their late 40s to their 90s, also get a Lucent pension.
Ambrus said elimination of the Medicare Part B premium reimbursement takes effect Wednesday and the other changes are effective Jan. 1, 2004. She said benefits to current managers already have been reduced, and the issue will come up for union workers and retirees when the current union contract runs out next fall.


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