Guild proposes alternative pension plan in Times talks
Just days after representatives of the Guild and Times negotiating teams received positive signals from IRS and Treasury officials in Washington about the viability of the Guild’s alternative pension concept, the Guild proposed the idea today at the bargaining table.
Ever since Times negotiators identified the current pension plan as the linchpin of contract talks, the Guild has searched for alternatives that would address their concerns about risk, volatility and costs while still preserving a defined monthly benefit for life for employees.
The best path to that goal, actuaries have assured the Guild, is the Adjustable Pension Plan (APP) that the Guild proposed.
Under the Guild's proposal, if the innovative pension plan is not ultimately approved by federal regulators, the retirement plan covering Guild members would revert to a 401(k) plan or other defined contribution plan, which Times management has said it wants.
“We're so sure that it will get approved that we're willing to say to you that if it doesn't get approved, the default is you get what you want,” New York Guild President Bill O'Meara told Times negotiators at a bargaining session at Proskauer, the company's law firm.
Despite the innovative nature of the APP, any change in the current defined benefit pension plan would be a concession by Guild members – and an effort to reach an acceptable agreement. The APP, which would apply only going forward and would not affect what employees have already accrued in the current pension plan, would differ from the current plan in several ways, including the risk of slightly reduced – or higher – annual accruals going forward.
Benefit accruals would be locked in after each year of an employee's career and could vary up or down, rather than be based on the best five of the last 10 years of service. Also, the investment strategy for the APP would be more stable and conservative, relying primarily on bonds rather than stocks. However, a positive aspect of the APP, an element that doesn’t apply under the current plan, is that when the plan’s investments do well, participants would receive a higher benefit. And most important, members would receive a monthly payment for life.
REGULATORS SEE NO OBSTACLES
The IRS and Treasury officials who heard the proposal at a meeting on Friday indicated that there were no significant roadblocks to approval, though that process could take some time. In fact, the major concern raised by the Times, whether the plan provided for a “definitely determinable benefit,” was put to rest by the government officials, who agreed that the plan as presented met that legally required definition.
The Times has made clear that it does not want to continue funding the current plan past the end of this year, which meant the matter of timeliness had to be addressed.
The Guild's proposal would allow the current plan to be frozen at the end of the year and be replaced by the APP on Jan. 1, 2013, even if IRS approval is still pending, which is allowable under law. The Guild proposed that the Times continue making contributions equal to what it currently pays into the pension plan. Those contributions would be redirected to an approved defined contribution plan if the IRS fails to approve the APP, under the Guild's proposal.
The Guild recognizes that this is a matter of great importance to members, and will hold additional informational meetings on the subject in coming weeks.