DENVER—Qwest Communications International Inc. is freezing its defined benefit pension plan for management employees, effective Jan. 1.
The Denver-based phone and Internet provider on Monday said it is freezing the plan to save money. It estimates that the freeze will generate annual savings of about $60 million.
“It is important for us to reduce costs…yet maintain competitive benefits and compensation for our employees. 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,” said Edward Mueller, Qwest chairman and chief executive officer, said in a statement.
Under Qwest’s 401(k) plan for management employees, the company matches 100% of employees’ salary deferrals, up to 3% of eligible pay.
The soon-to-be-frozen pension plan has two designs, with employees who did not have at least 20 years of service as of Dec. 31, 2000, and those hired after that date accruing benefits through a cash balance design. In that design, employees receive annual credits equal to 3% of eligible pay, while their account balances are credited with interest based on the 30-year U.S. Treasury bond rate. Employees with longer service earn benefits in a traditional service-based program.
In its third quarter, Qwest reported net income of $136 million on $3.1 billion in revenues, down slightly from the comparable period a year ago when it reported $145 million in net income on $3.4 billion in revenues.
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