Pressure to Cut Employee Benefits Threatens Labor Peace

via Wall Street Journal

Members of the Communications Workers of America protesting outside Verizon’s office in Philadelphia three years ago.

Many big companies are pushing to cut spending on employee benefits—from pensions to health insurance—and could face labor strikes as a result.

In all, major employers have about 400,000 union workers whose contracts are up for negotiation this year. They include the Detroit auto makers, whose workforces have a combined 140,000 members of the United Auto Workers; a group of railroad operators including CSX Corp., with 142,000 union employees; and telecom companies like Verizon Communications Inc., which is in talks with about 40,000 wireline workers.

Most labor talks involve some head-butting over benefits. But what’s different this time, corporate finance chiefs say, are a looming “Cadillac tax” on health-care plans and pension burdens that are dragging down profits.

At New York-based Verizon, executives want to “redesign and reshape” health plans in a bid to cut overall cost, said Fran Shammo, Chief Financial Officer.

Verizon also aims to rein in pension expenses. Its obligations for defined-benefit pensions—the kind that guarantee retirees a set payout—totaled $25.3 billion at the end of 2014, up 10% from 2013.

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About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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