Sprint-Nextel Dumps Employee Pension Plan

from Kansas City Business Journal - January 20, 2006

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Kansas City Business Journal - 2:25 PM CST Friday Sprint ends pension offering Sprint Nextel Corp. discontinued offering pension benefits to its employees on Jan. 1, a spokesman said Friday.

The move by Sprint Nextel, which employs about 16,000 locally, will shift the burden to employees to save for retirement through a 401(k) program the company offers.

"It gives associates increased flexibility to manage their retirement and also allows us to have success in the marketplace," Sprint Nextel spokesman David Gunasegaram said Friday.

Employees who have a pension will not lose their balance, Gunasegaram said, but they will not be able to earn any additional pension benefits starting in 2006.

"It's not like the money goes away," he said. "The government required us to meet prior obligations to our employees."

Sprint Nextel's 401(k) program provides a dollar-for-dollar match of as much as 5 percent of an employee's contributions.

Before merging with Nextel Communications Inc. in August 2005, Sprint Corp. reported a pension liability of $4.5 billion in its 2004 annual report. Nextel did not have a pension plan.

Sprint contributed $300 million to its pension fund in 2004 and 2005, according to the annual report. The report said the company expected to pay out pension benefits of $177 million in 2005, $180 million in

2006 and $1.7 billion between 2007 and 2014.

It is unclear where those balances stand today and how much of the pension liability will be shifted to Sprint Nextel's local phone spinoff, which employs several thousand unionized employees.

The spinoff, which will have 5,000 local employees and 20,000 total, will continue to have both 401(k) and pension benefits.

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[TELECOM Digest Editor's Note: Since its inception, Sprint has been notoriously anti-union. Ir really does not suprise me to see now that they are getting rid of employee pensions as well. PAT]