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Then the bubble burst. Between 1999 and 2002, the per-share price of Lucent stock plummeted from more than $64 to just 58 cents. Beltram, whose 401(k) was heavily invested in company stock, estimates his losses at $250,000. By 2001, the company was trying to cut costs by offering attractive early retirement packages to employees. Beltram took advantage of an offer that added five years of service to his pension calculation, boosting his monthly benefit check to $4,467. As an extra sweetener, the company agreed to cover 90 percent of health insurance costs for those who retired then -- and their spouses -- but only half for those who continued working. The Beltrams decided the offer was too good to ignore. "The main incentive was health care benefits," Beltram says. "We'd seen how health care costs were rising, and we wanted to be protected."After Beltram retired, the couple got more bad news. Lucent eliminated the health insurance subsidy for spouses. The Beltrams' monthly premiums rose from $42 in 2001 to $516 in 2004. The extra $5,688 a year doesn't mean the Beltrams can't keep a roof over their heads, but it leaves them with less discretionary cash in their budget. Beltram's job at the golf course helps fill in some of the gaps.
Sherry Beltram's father, Bob Rockel, is in a tougher spot than her husband. In 1989, Rockel retired from his job as a shop-floor supervisor at the same Oklahoma City plant where Ed worked. He'd been there for 43 years. One morning a few years ago, he and his wife, BettyAnn, were sitting around the kitchen table and going through the mail. BettyAnn opened an envelope from Lucent. Inside was a notice informing the couple that the company was ending its death benefit -- an amount equal to a retiree's annual salary at retirement and payable to the spouse if the retiree died first. Just like that, the Rockels had lost $52,000.
"They left us high and dry," says Rockel, adding that if he'd known earlier that Lucent would yank the benefit he would have bought a life insurance policy. Now, he says, he and his wife are too old for an affordable policy -- and too old to go back to work as well. "I don't think anybody wants a 79-year-old working," adds BettyAnn, who was employed as an administrative secretary for 10 years when her children were in college and draws her own small pension. So they carry on, minding expenses and hoping for the best. But, BettyAnn says, they're scared: "In the back of your mind you're always wondering what's next. If they can do this, what else can they do?"
Lucent spokeswoman Mary Ward confirms that the company has stopped subsidizing health care coverage for some retirees' spouses, calling it just one of many "very tough choices."
"We had to make some very difficult, but unfortunately necessary, decisions to remain a competitive player in the telecom industry," she says, adding that the rising cost of health care is a national issue, not one confined to Lucent.
There was similar reluctance to dropping the death benefit for supervisory employees like Rockel, adds Ward. Yet, "providing a death benefit is unusual, and most companies long ago eliminated death benefits from their retiree plans."
While they don't have concrete reason to worry, seeing their other benefits vanish has the Beltrams and Rockels questioning how solid their Lucent pensions are. Given the steady increase in companies defaulting on pension obligations -- and with the PBGC posting a record deficit last year -- their anxiety is understandable. The agency isn't in immediate danger of defaulting on pension payments it must cover, but some watchdogs argue that it must increase the amount it charges employers to guarantee their pensions -- or face trouble.
Against this backdrop, many retirees have banded together to try to protect their interests. As the communications director for the Lucent Retirees Organization, for instance, Ed Beltram writes members of Congress about the health benefit changes and has lobbied Lucent -- so far unsuccessfully -- to audit its pension trust fund to reassure skeptics among its 125,000 retirees. Bob Rockel attends monthly meetings of a group of Oklahoma City Lucent retirees called the Telephone Pioneers, and is considering joining one of three pending federal lawsuits aimed at restoring the death benefit.
As for the younger generation, the Beltrams' 33-year-old son Dustin has no pension to protect. A designer of interactive software for a company in San Jose, California, he's worked for half a dozen companies since graduating from college. Only one offered a pension plan; the others had 401(k)s. Hampered by waiting periods and vesting schedules, Dustin had saved just $1,200 in a retirement account over ten years, and had to cash that in for an urgent car repair.
Even if the plans had made it easier to save, Dustin says he couldn't anyway. He and his wife, Bridget Dolan, laid off from her job as a Web designer last winter, expect their first child in March. They're trying to pay down high-interest credit card debt and start a college fund for the baby. To reduce expenses, they sold their house in November and moved into a rental.
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