SBC Brings Back Traditional defined benefit Pension - Employees wanted it

http://www.latimes.com/business/la-fi-sbc26jan26,1,4494289.story?coll=la-headlines-business
CALIFORNIA
SBC Brings Back Traditional Pension
The firm says it wants to reward longtime managers. Experts say it might start a trend.
By Kathy M. Kristof and James S. Granelli
Times Staff Writers

January 26, 2005

SBC Communications Inc. is bringing back a traditional pension plan for 55,000 management employees — a move that industry experts call virtually unprecedented.

Traditional pensions, which promise to pay retirees fixed monthly benefits for life, have been on the wane for the last decade as hundreds of companies have moved to "hybrid" plans that work more like 401(k) programs.

The new retirement plans, including "cash-balance" and "pension equity" programs, are cheaper and more predictable for employers because they contribute the same amount each year. Employees are entitled to proceeds of money invested on their behalf but receive a benefit at retirement that can vary depending on market conditions.

San Antonio-based SBC, a telecommunications giant formed through the mergers of several regional phone companies including California-based Pacific Telesis Group, said Tuesday that it opted to bring back the traditional pension to reward long-term employees, including 15,000 managers in California.

"We want to reward those who stay with us a long time," SBC spokeswoman Anne Vincent said.<snip>

"This could be the beginning of a trend if Congress resolves some issues around pension funding reform," said Lynn Dudley, vice president and general counsel at the American Benefits Council in Washington.<snip>

The one caveat: Current laws make it difficult to know what a traditional pension will cost from one year to the next. That makes it tougher for companies to offer them, she said.

But Congress has been working on several bills aimed at fixing that problem, and Dudley said she was hopeful that the traditional plan would make a comeback.

welcome with plans asking about converting back to career average defined benefit plans.