Tuesday, May 04, 2010

By the numbers | Gannett's retirement plans

The company froze most of its employee pension plans in August 2008, in a money-saving move where the company's retirement contributions shifted more to Gannett's 401(k) plan. Once a year, the company issues a so-called Annual Funding Notice to participants. Following are key figures as of Dec. 31, from the recently published notice, and from the latest proxy report to shareholders:

market value of pension's investments

amount due (liabilities) to current and future retirees

$504,133,647 *
unfunded amount (difference between assets and liabilities)

$10 million
"voluntary contribution" Gannett made to plan early this year

total plan participants

active participants

participants retired or separated from service and
receiving benefits

retired or separated from service and entitled to future

increase last year in value of CEO Craig Dubow's pension accounts

. . . of President Gracia Martore's

. . . of newspaper division chief Bob Dickey's

. . . of USA Today Publisher Dave Hunke's

* Gannett's most recent annual 10-K report to the U.S. Securities and Exchange Commission says: "The company’s principal retirement plan, the Gannett Retirement Plan, had assets of $1.75 billion and liabilities of $2.19 billion at Dec. 27, 2009." Perhaps one of my readers can explain the apparent variance in these amounts from the Annual Funding Notice.

Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.


  1. You have hit on one of my favorite issues involving Gannett's unfunded liabilities in its pension program. I believe that during one of these economic crunches, corporate is just going to walk away from this pension program, and turn it over to the federal pension agency, the Pension Guarantee Trust, including its unfunded liability. That would mean that Gannett retirees would see their monthly pension checks cut by about a quarter.
    The variance you talk about I think is due to whatever they are investing in. With such a large deficit, the pressure is on the pension fund to invest in higher yielding bonds. Unfortunately, we have seen with the real estate collapse what happens with high-yielding bonds that are rated at the AAA level. AAA used to be a seal of safety. I don't think the variance is as big a deal as the $500 million corporate owes the pension plan to make it whole.

  2. This report is on the traditional pension plan, not the 401K that was frozen.

  3. Q: How can an employer terminate a pension plan?

    A: There are two ways an employer can terminate its pension plan.
    The employer can end the plan in a standard termination but only after showing the Pension Benefit Guarantee Corporation (PBGC) that the plan has enough money to pay all benefits owed to participants. The plan must either purchase an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or, if your plan allows, issue a lump-sum payment that covers your entire benefit. Before purchasing your annuity, your plan administrator must give you an advance notice that identifies the insurance company (or companies) that your employer may select to provide the annuity. PBGC's guarantee ends when your employer purchases your annuity or gives you the lump-sum payment.

    If the plan does not have enough money to pay all pension benefits owed to participants, the employer may apply for a distress termination if the employer is in financial distress. PBGC cannot grant the application, however, unless the employer proves to a bankruptcy court or to PBGC that the employer cannot remain in business unless the plan is terminated. If the application is granted, PBGC normally will take over as trustee of the plan and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds.

    Q: When does PBGC terminate a pension plan?

    A: Under certain circumstances, PBGC may take action on its own to terminate a pension plan. Most terminations initiated by PBGC occur when PBGC determines that plan termination is needed to protect the interests of plan participants or of the PBGC insurance program. PBGC can do so if, for example, a plan will be unable to pay benefits when due.

  4. @7:34 am The 401K was not frozen. The pension plan was what was frozen. At any rate- I was letting them hang onto it after being restructured last August because the COLA adjustment was 2.2%. But I just submitted my paperwork and want it out of THERE!!!

  5. It should be illegal for a company to give out bonuses when its pension plan is underwater.

    Why does it need to honor contracts with executives if it isn't prepared to honor its contracts with most of the company's employees.

  6. One of the great benefits I found from choosing not to "re-apply" for my position in Westchester last year was gaining control of my pension.

    I wasn't gone two weeks when I had it rolled over into an IRA.

    And believe me, I'm doing a heck of a lot better than the measley COLA increase.

    A mix of mutual funds, CDS, and money market funds tops COLA as well as the "special" contribution Gannett makes to the 401-ks of older employees whose pensions have been frozen.

    That so, so "special" contribution probably wouldn't pay Dickey's greens fees for a month.

  7. I considered the pension situation carefully in 2008 when deciding whether to volunteer for a layoff. Ultimately, I decided to throw the dice and take the pension with me. I don't think I could have made a better decision.

  8. Taking the pension was the best decision I made too -- no question! Good luck to those with money still tied up.

  9. I'm among the
    participants retired or separated from service and
    receiving benefits."
    I'm praying that Gannett manages to turn itself around and will be able to keep paying my pension every month. I was (mistakenly) under the impression that those payments were from an insurance annuity they bought when I accepted a buyout.
    No sense losing sleep over it. It, like the direction of my career, is totally out of my control.

  10. I too think that bonuses should not be allowed to anyone in companies with underfunded pensions.

  11. is the company match to 401(k)s fully funded from the start or can Gannett underfund it too? are 401(k) savings and company matches guaranteed in any way by an agency like the PBGC? (I don't mean insuring me against my own bad investment choices -- I mean if the company goes bust.)

  12. If I'm not mistaken, the 401k money is yours the moment you are vested, and the company can't touch it.

    It could, of course, decide to stop matching contributions. But I haven't heard anything about that yet.

  13. Regarding 8:48 p.m.....There's one plus that Gannettoids still get: Company contributions to the 401-k.

    News Corp., at least at its community newspaper group, no longer offers an employee match. Don't know if that will change.

  14. Jim I am not sure where you got your numbers. Ireceived my annual funding notice yesterday and my numbers do not agree with yours.

  15. 10:31 pm: I need more details.

  16. My mistake, I did not read the crap on the backside. Why they did not icorporate it in their chart on the front page makes me wonder what they are trying to down play.


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