Disney Tightens Retiree Health Care Rules : Benefits: Employees must stay to age 55 to qualify, no matter how many years on job. Many will quit before July 1 deadline.
The Walt Disney Co., reeling from continued losses at Euro Disneyland, is tightening eligibility requirements for retirement health care benefits among its 70,000 employees worldwide.
The new Disney policy requires workers to stay with the company until they are at least 55 years old to receive the post-retirement health benefits.
That’s in addition to the previous requirement that employees work a minimum of 30,000 hours over 20 years. Before, retirees received the benefits regardless of their age at resignation.
Eligible, hourly employees younger than 55 have until July 1 to leave the company or be subject to the new rules, which took effect March 1.
Some workers suggest that Disney’s primary motivation is to gain additional savings as higher-paid, veteran employees resign to preserve their current benefits.
“What upsets me so much is that I’m not ready to leave. But I’m being forced to,” said a 39-year-old Disney supervisor who spoke on condition of anonymity. “That kind of upsets me, but I have no other option. It’s their way of cleaning everything out.”
Disney spokesman John Dreyer denied any attempt to entice veteran workers to leave the company. He said the grace period was “made out of fairness to long-term employees to give them an option”--retire, or fall under the new rules.
Dreyer would not reveal how much money Disney expects to save by cutting retirement benefits, but he said it is substantial. “It’s more in line with corporate America, but it remains a good plan,” he said of the revised benefits.
Saving Disney even more money, the new rules also will postpone health benefits for retirees by three years until age 65, when they would also be eligible for Medicare.
The health benefit changes are the latest cost-cutting moves at Burbank-based Disney, which is still reeling from losses at Euro Disney resort. Disney’s half-ownership of the troubled French attraction cut $514 million off its bottom line last fiscal year. Euro Disney is undergoing a financial restructuring and the effects are reverberating throughout the company.
The entertainment giant recently reversed a longstanding policy against releasing its cinematic crown jewel, the 1937 animated classic “‘Snow White and the Seven Dwarfs,” to the videocassette market.
Though possibly dampening future box office returns, the move should generate tens of millions of dollars in new revenue.
In light of Euro Disney losses, Disney is widely believed to be re-evaluating whether to proceed with its planned $3-billion Disneyland Resort project, which would add a new Westcot theme park and several hotels to Disneyland in Anaheim.
In the theme park division--the company’s largest and most profitable sector--Disney recently took the uncommon move of dismissing 60 middle managers at Disneyland in Anaheim and 300 at the Walt Disney Resort in Orlando, Fla. Disneyland workers said in a recent company poll that they believe penny-pinching has reduced the quality of the park for visitors.
The new retirement health rule strikes particularly hard at the 45,000 workers in Disney’s theme park division, because so many started in high school or college, climbed through the ranks to middle management and are still more than a decade from age 55.
“They have been pushing people out the door for a while,” said one janitor with more than 20 years of experience.
Workers were informed of the changes in February letters from Executive Vice President Sanford M. Litvack. He cited “rising health care costs and President Clinton’s health care proposals” as reasons for the change.
But the path was cleared at Disneyland--Orange County’s largest employer with a peak work force of 12,000 workers during the summer--in labor negotiations two years ago. Then, says another veteran janitor who is a union shop steward, the park’s four major unions threw down a gauntlet when the company insisted on the option to reduce retirement health benefits: make them apply to management as well.
“When the salaried personnel found out (about the proposed contract cuts), all hell broke loose. They were flabbergasted,” said the steward, who declined to be identified. “They could not believe the company would turn around and agree to such a clause in the contract. . . . That caused a stink all the way to Burbank.”
The supervisor who intends to quit said the cutbacks are just another example of how Disney, and Disneyland, have changed.
“They have whittled away the perks that made it special,” she said.
No longer do employees receive green-tinted carnations to wear on St. Patrick’s Day, or red ones for Mother’s Day.
But, hesitating for a moment, she said pensively: “Little by little, I have noticed all those little things.”
How Old, New Plans Compare
Walt Disney Co. has made it harder for its workers to become eligible for company-provided health care when they retire. Hourly employees with at least 20 years of service have until July 1 to decide whether to quit in order to qualify under the old rules.
OLD PLAN
* Benefits provided to workers who complete
20 years of service and 30,000 credited hours
on the job
* Coverage begins upon retirement at age 62
NEW PLAN
* Benefits provided to workers who complete 20 years of service and 30,000 credited hours on the job and work for the company until at least age 55
* Coverage begins upon retirement at age 65
WHO MIGHT BE AFFECTED AT DISNEYLAND
* More than a third of the Disneyland work force, 37.8%, are full time. The rest are part time or temporary.
* Full-time employees have a median age of 36, higher than the overall park median age of 24. The work force is equally divided between men and women.
* Four in 10 Disneyland employees are the primary wage earners in their households.
* Full-time employees stay with Disneyland for an average of seven years. The median for the whole park is three years.
Source: Walt Disney Co.; Researched by CHRIS WOODYARD / Los Angeles Times
