December 3, 2004
Nelson Phelps, President and Executive
ASSOCIATION OF U S WEST RETIREES
AUSWR Board Members and general membership
Several weeks ago, I received from Qwest the
Qwest Pension Plan annual report for year 2003, the most recent
report available. This report was filed with the United States
Department of Labor and the Internal Revenue Service on or about
October 15, 2004.
The federal regulations imposing filing
requirements on pension plan sponsors, like Qwest, are archaic,
especially in this day and age of computerized data and record
keeping. Today, the same filing requirement continues to exist as
it did in 1974, allowing a plan sponsor, like Qwest, to wait until
October to file a report about the prior year. In other words,
retirees will not receive public disclosure about this year's
financial condition of the Qwest Pension Plan until about October
15, 2005. The filing and disclosure regulations ought to be
changed, something the National Retiree's Legislative Network ought
to seriously consider channeling some energy towards bringing about.
I have attached hereto in Adobe PDF file
format a chart which shows the salient figures for each year ending
on December 31 -- years 1999-2003. All figures shown on the
attached report are from the "Financial Statements and Supplemental
Schedules" Qwest filed with the Internal Revenue Service and the
United States Department of Labor.
The good news is that the 2003 annual
report shows there was a small recovery in the total value of
plan assets over year ended 2002. What has happened since
December 2003, so far this year, we don't know.
The attachment report show a tremendous
decline in the total assets of the U S WEST/Qwest Pension Plan from
December 1999 to December 2004. Total assets at the end of year
1999 were $14.6 billion. Total assets at the end of 2003 were $9.2
Obviously, the decline in assets is
attributable to the following primary factors: a) Payment of
Pension Benefits - several billion dollars left the trust in the
form of monthly annuities and lump sum payments that were earned by
more than 15,000 departing workers; b) Payment of Retiree Health
Care Benefits - when the trust had a surplus, several hundred
millions of dollars left the trust fund and were spent on retiree
health care benefits, as allowed by Internal Revenue Section 420;
c) Payment of 'Severance' Benefits - between August 11, 2000
and June 30, 2003 about $480 million was paid out of the trust fund
in the form of a special 'severance payment', the Qwest Management
Separation Plan benefit; and d) Investment Losses - there
have been significant investment losses.
In addition, the trust fund is spending about
$50 million each year for "administrative expenses."