WAVERLY -- The recession is hitting home in a particularly harsh way for retirees at Madison, Wis.-based CUNA Mutual Group, which operates one of its two branch offices in Waverly.

As of Jan. 1, CUNA Mutual is eliminating the company's 50 percent subsidy of retirees' medical benefits.

The cutback affects about 1,000 CUNA retirees, the company said.

CUNA currently employs about 550 of its total work force of 4,000 in its Waverly office. The company also operates a service center in Fort Worth, Texas, in addition to its Madison home base. The company also has a network of employees who operate independently across the U.S. and internationally.

Retirees will be weaned off the benefit, in a sense, since CUNA Mutual will send each of them, by the end of December, a check in the amount equivalent to two years of the company subsidy.

The retired workers will remain eligible to continue their coverage, but it will be up to them to pay the entire premiums.

The move, which will save the company about $100 million, was necessary "to remain financially stable," Kerry Piercy, senior vice president of human resources, said in a Dec. 18 letter to all retirees.

It's not just the ongoing troubles on Wall Street that prompted the decision, company spokesman Rick Uhlmann said Monday.

"It's the entire economic downturn," he said. "Certainly, this is about retaining our financial strength above anything else. It's in the best interests of our 400,000 policyholders during an (economic downturn) which is really unprecedented."

The subsidy also will end for retirees who are using sick time accrued during their employment with the company to further subsidize premiums.

Uhlmann said the policy change likely is permanent.

"I don't know that any changes are being looked at at this time," he said. "It's one of those things that's going to bring the company immediate and, we expect, long-term benefit."

Piercy pointed out in the letter that CUNA Mutual's retiree medical plan was not commonplace, anyway.

"While we've been proud to be part of just 35 percent of U.S. businesses who offer retiree medical coverage, continuing to carry this kind of liability on our balance sheet -- a liability well in excess of $100 million -- is simply too much for a company of our size and surplus in these uncertain economic times," she said.

The company also has changed some benefit packages for current employees.

"There is a salary freeze for nonunion-represented employees, so we are taking some other steps," he said.

There are no unionized workers in Waverly, he added.

The company has not, however, imposed any hiring freezes, Uhlmann said.

"We're filling positions that need to be filled," he said.

The move came as news to Mike Ralston, president of the Iowa Association of Business and Industry, of which CUNA Mutual is a member.

"CUNA has a reputation for taking care of employees and great benefits," said Ralston, a native of Grundy Center and a former mayor there.

But, he said, such cutbacks are not necessarily uncommon in challenging economic climates.

"The trend, I think, is that companies are looking at absolutely every penny they can save," he said.

Contact Jim Offner at (319) 291-1598 or jim.offner@wcfcourier.com.