Gannett freezes employee pensions

[StaggerLee]

Memo just went out company-wide.

Sadly, I'm not financially responsible enough to know how this will actually affect employees, other than the memo stating that it should be noted that nearly all employees will see a diminished benefit.

http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003815509

Coming Today: Gannett Expected to Freeze Employee Pensions

By Joe Strupp

Published: June 11, 2008 3:40 PM ET

NEW YORK Gannett is expected to freeze the pensions of company employees, according to sources at several newspapers, who said a memo on the plan is slated for later today from Gannett CEO Craig Dubow.

The change is also expected to include a change in 401K match, with employees gaining Gannett stock for each contribution to their 401K fund. It's unclear, from what we told, if that would replace a cash contribution or be in addition to that.

Gannett officials did not respond to requests for comment. The move comes just days after Gannett announced it would write down its assets by about $2.5 billion to $3 billion this quarter to reflect the declining value of its operations in the United Kingdom and the United States.

A memo from Dubow circulating today, sent to E&P, includes the following:
*
"Dear Co-workers:

Beginning Aug. 1, Gannett will freeze the Gannett Pension Plan and improve the Gannett 401(k).

Freezing the Pension Plan means:

- On Aug. 1, your pension plan benefit will be frozen. It will not continue to grow (based on your years of service and final pay) as it did in the past.
- All your benefits currently in the Pension Plan remain there for your retirement.
- A cost-of-living allowance will be applied to your frozen benefit to help protect it from inflation.

Gannett is improving the 401(k). The new match for the Gannett 401(k), beginning Aug. 1, will be:

- Gannett contributes $1 in Gannett stock for every $1 you contribute (up to 5% of your pay).
- Most Gannett employees now receive a 50-cent match for every $1 (up to 6% of your pay).
- This is a large improvement in the 401(k) match.

In the next few days, you will receive a Personalized Benefit Statement mailed to your home, showing your current benefit in the Pension Plan (this is the amount that will be frozen beginning August 1st) and information about the 401(k)."

 

[Ben_Hecht]

And away we go.

 

[wickedwritah]

I'm sure this will not fly at Guild shops.

 

[Write-brained]

Glad I got out of Gannett when I did, though I wish it had been even earlier.

This is just tasteless and wrong. Good thing we have the new Gannett mausoleum newseum to remind us what newspapers once were.

 

[alleyallen]

Memo just went out company-wide.

Sadly, I'm not financially responsible enough to know how this will actually affect employees, other than the memo stating that it should be noted that nearly all employees will see a diminished benefit.

http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003815509

Coming Today: Gannett Expected to Freeze Employee Pensions

By Joe Strupp

Published: June 11, 2008 3:40 PM ET

NEW YORK Gannett is expected to freeze the pensions of company employees, according to sources at several newspapers, who said a memo on the plan is slated for later today from Gannett CEO Craig Dubow.

The change is also expected to include a change in 401K match, with employees gaining Gannett stock for each contribution to their 401K fund. It's unclear, from what we told, if that would replace a cash contribution or be in addition to that.

Gannett officials did not respond to requests for comment. The move comes just days after Gannett announced it would write down its assets by about $2.5 billion to $3 billion this quarter to reflect the declining value of its operations in the United Kingdom and the United States.

A memo from Dubow circulating today, sent to E&P, includes the following:
*
"Dear Co-workers:

Beginning Aug. 1, Gannett will freeze the Gannett Pension Plan and improve the Gannett 401(k).

Freezing the Pension Plan means:

- On Aug. 1, your pension plan benefit will be frozen. It will not continue to grow (based on your years of service and final pay) as it did in the past.
- All your benefits currently in the Pension Plan remain there for your retirement.
- A cost-of-living allowance will be applied to your frozen benefit to help protect it from inflation.

Gannett is improving the 401(k). The new match for the Gannett 401(k), beginning Aug. 1, will be:

- Gannett contributes $1 in Gannett stock for every $1 you contribute (up to 5% of your pay).
- Most Gannett employees now receive a 50-cent match for every $1 (up to 6% of your pay).
- This is a large improvement in the 401(k) match.

In the next few days, you will receive a Personalized Benefit Statement mailed to your home, showing your current benefit in the Pension Plan (this is the amount that will be frozen beginning August 1st) and information about the 401(k)."

You're not going to lose the money (if any) you already have in your pension plan, but you also won't get any future funds added, or see any growth if it's a cash balance plan.

Getting the company match in stock as opposed to an outright contribution blows, though. All those Enron employees who had their entire 401 (k) invested in company stock and company stock matches really took it hard when the company crated.

 

[DanOregon]

Gannett stock absolutely killed my 401k, if you didn't get your money out of Gannett each quarter, it would eat all of your gains in other categories. Now with employees getting more big G stock its only going to be worse. And even if they give a COLA on the pension, that means G will be able to tap into any pension fund growth over the 3 percent.
How long do you think an employee would last if he went to a boss and said, uh, I'm going to give YOU less when I work here. How'd you like that?

 

[WS]

got to make those quadruple profits

 

[Baltimoreguy]

I've been out of Gannett for a while, but if my understanding of the pension is correct, this will be a significant hit for many people, particularly those who have been there the longest.

- On Aug. 1, your pension plan benefit will be frozen. It will not continue to grow (based on your years of service and final pay) as it did in the past.

The old plan was that your pension would be some formula involving a percentage of your final pay (which was usually your highest pay) multiplied by the number of years you worked there. Now they're slicing that off.

Gannett is improving the 401(k). The new match for the Gannett 401(k), beginning Aug. 1, will be:
- Gannett contributes $1 in Gannett stock for every $1 you contribute (up to 5% of your pay).
- Most Gannett employees now receive a 50-cent match for every $1 (up to 6% of your pay).
- This is a large improvement in the 401(k) match.

Company match has always been in stock only, so that' s no loss -- no loss, that is, except the crushing losses in the value of Gannett stock in recent years. So the old highest match formula was if you maxed out at 6% contribution, they'd kick in 3% for a total of 9%. Now, it looks like if you max out at 5% contribution, they'll kick in 5% for a total of 10%. So, GCI has suddenly severed its pension plan and increased its 401(k) contribution from 3 to 5%. So generous. For someone making $40,000, that's a whopping extra $800 a year in your retirement account.

 

[hankschu]

This actually happened at my shop, a guild shop, with our approval, of course.

It does mean a smaller monthly pension, but it also had one effect that actually benefits employees who are thinking of leaving the paper or business and getting another job. There's less need to stick around to boost your pension.

When they capped our pension, my wife, already at the top level, quit and got another job. Now, as soon as she turns 55 in five years she can start taking the pension for the rest of her life, in addition to what she earns at her current job.

I'm in the same boat, and it might allow persuade me to retire early.

Because the monthly payment is capped, it doesn't matter if you start taking it when you're first eligible (I think that's 55 in our unit) or later down the road.

My wife left the paper

 

[Baltimoreguy]

Good point. I was thinking the same thing -- I knew some old-timers who were hanging around to keep ringing up that "years of service" multiplier. Now that that's capped, I bet some of them hang it up. Almost like a backdoor buyout for Gannett.

 

[playthrough]

My wife's media company did something similar, offering stock matches for the 401k. I don't think a share of that stock can buy a pack of gum right now.

 

[black dude with pompano]

My company offers a fairly generous pension plan. But I'm not yet 30 and I have absolutely no illusions that it will be around for my retirement. If it is, it will be a nice benefit, but it's nothing something I'm counting on in this climate.

 

[Moderator1]

My company froze pensions a while ago. That made leaving when I did easier - my check at retirement will be the same thing as it would be if I stayed until I was 65.

 

[BrianGriffin]

I've never heard money advisers (your Suzie Ormans, Clark Howards, etc.) advise people to include company stock in their 401k. Their argument is, if the company goes south, you put yourself in double jeopardy with both your job and your retirement.

It seems like Gannett is encouraging exactly what the financial advisers are warning against.

Considering the direction Gannett is headed, I'd take my money out of their 401K and find a good Roth IRA. Matching worthless stock is doubling nothing...I'm not saying Gannett stock is going to be worthless, but with the state of newspapers being what it is, would you take that gamble?

 

[Starman]

Just wait until other companies in more precarious financial conditions start raiding employee pensions.

 

[John Drama]

Oh, snap. I work for Gannett. Glad I read it here first. wtf?

 

[pressmurphy]

With regard to Guild newsrooms, this is probably a wash because I don't think Gannett was letting represented employees participate in the 401(k) plan. Guild or no guild, relatively few veterans are grandfathered into the much more valuable pension plan that was converted to the new (i.e., **** 'em) system for just about everybody in 1999.

Represented employees will now get a 401(k), and the 100 percent match on the first 5 percent is reasonably nice -- while it lasts. Remember, boys and girls, that Gannett is under no obligation to maintain that level of match for any amount of time. Best bet is they return to 50 percent of the first 6 percent some time in the next couple of years.

And, by all means, remember to convert the Gannett stock acquired in company match into other investment options every quarter.

 

[mustangj17]

This is unfortunate for all involved. I guess for those younger members on this board, it would be a good idea to start putting a little money away each month for your own pension. You never know when your company is going to screw you.

 

[VJ]

It's going to great when Gannett pulls an Enron, only it will be members of the press getting effed instead of random folks in Texas. This is going to create a ****storm of epic proportions if Gannett stock goes the way of JRC.

 

[donaugust]

So if I worked for Gannett for a little over a decade and left two years ago, this doesn't affect my pension, right? Man -- pensions are the thing I understand the least.

After my first year in the 401(k) plan I always made sure to reallocate the funds and get rid of the Gannett stock they matched with. Not surprisingly, I did well on that model.