Verizon will save money by cutting manager's pension

Verizon Communications, the second largest U.S. telecommunications firm, is planning to restructure their retirement benefits in hopes of saving around $3 billion for the next 10 years. Once put into action, this will affect 50,000 managers. Those employees who are currently under a defined-benefit plan, which typically consists of a fixed payout at the time of retirement depending on earnings and years of service, will keep pension already earned and receive an 18-month enhancement next June equal to the value of their pension and retiree medical benefits. The company says that these changes, even though they do not affect union workers or those already retired, will save $3 billion pre-tax over the next 10 years. Verizon Wireless is a joint company of Verizon and Britain's Vodafone Group, and their managers do not currently have pension or retirement medical benefits. These companies have begun to phase out the defined-benefit plan because they have found them to be too expensive. Verizon Chairman and Chief Executive said that these changes will provide the company with more affordable benefits and increase their ability to compete in this market.

Do you think this is the most efficient way for Verizon to cut costs and save money? Are there other ways they could in a sense achieve the same goal and still remain competitive in this industry? Also, how much more competitive do they need to become, if they are already the second largest company...should cutting costs even be one of their top priorities right now?