In a memo yesterday, Corporate sent employees an annual report on the state of the company's main pension plan, called the Gannett Retirement Plan. (See full memo text, below. I've posted the five-page annual report here.)
A reader who forwarded the report to me today asked what I thought about the funding levels it details.
First, the figures in this Annual Funding Notice are substantially similar to the numbers Corporate reported to the U.S. Securities and Exchange Commission in February. (I wrote about those SEC numbers here.)
To get to my reader's question: The most recent funding level in yesterday's report -- 81% -- is better than the 74% national average, according to a February report by BNY Mellon Asset Management. In other words, as of Jan. 1, the retirement plan held 81% of the stocks and other investments needed to meet all its obligations to retirees.
Of course, everyone would like to see their pension plan funded at 100%. As Corporate itself says in the report: "The higher the percentage, the better funded the plan."
Theoretically, over time, the pension plan's assets will grow sufficiently to cover all its obligations.
But keep in mind that I'm not a pension expert. Readers with more experience may weigh in with comments of their own.
Text of memo
From: Gannett Benefits
Sent: Friday, April 27, 2012 10:03 AM
Subject: Gannett Retirement Plan - Annual Funding Notice
Dear Participant,
The Pension Protection Act requires pension plans similar to the Gannett Retirement Plan to provide all participants with an Annual Funding Notice. This notice is required for most pension plans that are insured by the Pension Benefit Guaranty Corporation (PBGC), a federal agency, regardless of the plan’s funding status.
The format and wording of this notice is largely dictated by the Department of Labor and is similar to the notice provided last year. The attached Annual Funding Notice provides information for 2011, the most recent complete plan year, and includes the following:
For more information about this notice, including additional contact information, please refer to the section entitled “Where to Get More Information”.
To get to my reader's question: The most recent funding level in yesterday's report -- 81% -- is better than the 74% national average, according to a February report by BNY Mellon Asset Management. In other words, as of Jan. 1, the retirement plan held 81% of the stocks and other investments needed to meet all its obligations to retirees.
Of course, everyone would like to see their pension plan funded at 100%. As Corporate itself says in the report: "The higher the percentage, the better funded the plan."
Theoretically, over time, the pension plan's assets will grow sufficiently to cover all its obligations.
But keep in mind that I'm not a pension expert. Readers with more experience may weigh in with comments of their own.
Text of memo
From: Gannett Benefits
Sent: Friday, April 27, 2012 10:03 AM
Subject: Gannett Retirement Plan - Annual Funding Notice
Dear Participant,
The Pension Protection Act requires pension plans similar to the Gannett Retirement Plan to provide all participants with an Annual Funding Notice. This notice is required for most pension plans that are insured by the Pension Benefit Guaranty Corporation (PBGC), a federal agency, regardless of the plan’s funding status.
The format and wording of this notice is largely dictated by the Department of Labor and is similar to the notice provided last year. The attached Annual Funding Notice provides information for 2011, the most recent complete plan year, and includes the following:
- the Plan's funded status
- a statement on the Plan's assets and liabilities
- the funding and investment policies of the plan
- the asset allocation
- a description of what benefits are guaranteed by the PBGC
For more information about this notice, including additional contact information, please refer to the section entitled “Where to Get More Information”.
I have yet to access the pension I earned with Gannett as I figured it was federally guaranteed. And so what's the rush?
ReplyDeleteBut I am not well-versed in these matters, and I certainly never expected an "early retirement," so excuse me if this is a dumb question:
Does 81% funding mean that if I take the pension now that I do not get 100% of the figure I was given at the time of the pension freeze?
Thanks for your input. While opinions here might vary, any information is a damned-sight faster on this blog than dealing with Gannett once they've kicked one's longtime career to the gutter.
That's just sad.
Just an aside, if I may. I had to chuckle at the ironic choice of illustration for the topic.
ReplyDeleteOf both items depicted -- a stereotypical gold watch, sure, but some formal written recognition of one's years especially -- neither is likely in a Gannett retiree's future.
It sure as hell wasn't in mine.
With this company, you're here one day and gone the next. Poof. The graphic just seems depressingly ironic.
5:12 asks: "Does 81% funding mean that if I take the pension now that I do not get 100% of the figure I was given at the time of the pension freeze?"
ReplyDeleteBased on your question, it sounds like you are no longer employed by the company, so could tap your pension now.
(Under the plan's rules, you can't get access to any of your benefits until you've left the company.)
Now, as to your question: You would get the full 100% you are owed.
In theory, that 81% funding rate would become a problem if every one of the nearly 50,000 plan participants were given a lump sum payout at the same time.
That's not going to happen. First of all, 16,700 of the participants are still Gannett employees. And they're not going to quit simultaneously.
As for the rest, they've apparently opted to get monthly checks -- now, or in the future -- rather than a lump sum payout.
About 16,200 are already getting those checks.
Another 16,700 have retired but apparently are waiting to hit retirement age to start drawing their benefits.
Please bear in mind that I'm a layman when it comes to pension rules. If you have a particular concern, you would be well advised to contact a professional, such as a lawyer, financial planner, or accountant familiar with pension regulations.
One thing I've learned is that if you are receiving disability from Gannett's plan, the disability payments are reduced by the full amount of any pension payments you receive.
ReplyDeleteJust a few areas of clarification. If everyone who was eligible for pension left the company at one time, there would be a 19% deficit. Gannett would have to decide to take that from operating funds. More than likely we are talking a bankruptcy situation. In that case, the shortage would be covered by the Pension Benefit Guaranty Corporation. It's a federal agency just like the FDIC. Most companies these days with defined benefit plans are underfunded these days. There should be some language in the annual report besides the funding level what portion of profits Gannett will place in the retirement fund to make up for the shortage. I would recommend that anyone leaving these days take a lump sum benefit and put it in an IRA.
ReplyDeleteLooks like my reply didn't post. I will state up front that I am not a pension expert. Reading the statement concerns me in some ways, but not in others. The continued decrease in the percentage of funding is what concerns me, but on the other hand, when you look at the number of people who have left one way or another, you can understand why the level is going down. It also appears that Gannett is choosing to not add any more funds to the program to bring its funding level up. The 5 page document is clear about what happens to a fund if it runs into problems and the feds (PBGC) have to take over. It's like the FDIC for pension plans. My recommendation to anyone who has left the company, but hasn't exercised their pension rights to do so immediately. I would suggest they go for a lump sum and put it in an IRA.
ReplyDeleteWhen Gannett killed the Arkansas Gazette in 1991 I contacted the pension plan office and asked what were my options after 25 years of service under the Arkansas Gazette/Gannett pension plans. I was told (I was then around 51 or 52) that I could take a lump sum of around $12,000, take a monthly check that would last until I used up all the money, take a reduced guaranteed monthly amount until I died or take an even smaller guaranteed monthly amount until both I and my wife died. I picked the last option. I get around $390 a month after taxes.
ReplyDeleteI'm glad I got all my dough up front. I don't think I'd trust Gannett enough to let them spread out the payments. I never intended to rely on their pension to fund my retirement, so I reinvested it immediately upon payout. Best decision I ever made. Why have them continue to invest your money when they can't even run a company properly?
ReplyDeleteI worked for Gannett for seven years at USA Today, and a few years at two other Gannett publications. I'm not near retirement age, but I assume I will be eligible, at some point, for a pension. Who should I contact to get specific information about the plan as it pertains to my time with the company?
ReplyDelete