RESTON, Va.-Sprint Nextel Corp. has hopped on the pension-freezing band wagon, following similar moves by Verizon Communications Inc., IBM Corp. and Sears.
The freeze will mean that nearly half of Sprint Nextel’s 80,000 employees will no longer accumulate pension benefits and will have to rely on whatever benefits they have already earned, plus a 401(k) plan with a 5 percent contribution match from the company, according to published reports.Former Nextel Communications Inc. employees and those at Sprint Nextel’s local phone division will not be affected; Nextel did not have a pension plan, and the 20,000 people at the local telephone company will keep their pensions when the division is spun off later this year.
Sprint Nextel representatives did not return a request for comment.
According to Pensions & Investments, which is published by RCR Wireless News parent company Crain Communications Inc., Sprint Corp. contributed $300 million to its $3.68 billion pension plan in May 2005, with no other contributions planned for 2005. The plan was underfunded by $788 million as of the end of 2004.
A growing number of companies have instituted pension freezes, either halting accumulation of benefits by all employees or taking alternative approaches such as not allowing new employees to enroll, which is how Motorola Inc. opted to handle pension issues several years ago. Still others, including manufacturing and airline companies, have declared bankruptcy and then turned their pension obligations over to the federal government.
