The Washington Post announced large cuts in retirement benefits on Tuesday, declaring that it would eliminate future retirement medical benefits and freeze defined-benefit pensions for nonunion employees.
The company also said that in negotiations that started Tuesday, it will seek to impose the same conditions on employees covered by the union — one of the first indications of how The Post’s new owner, Amazon.com founder Jeffrey P. Bezos, will manage relations with the staff of the news organization.
The changes will hit hardest at employees hired before 2009 who could plan on receiving pension payments based on their income and years of service. Each of those employees could see scores — or hundreds — of thousands of dollars less over the course of a retirement. More recent hires do not have traditional pension plans.
The Post will create a new cash balance plan to replace the pensions for nonunion employees and a separate but similar plan for those covered by the union. Those plans provide employees with a lump sum or annuity when they retire. But they do not guarantee a particular level of retirement payments, thus reducing the risk that Bezos would have to add money to the pension if financial markets plunged.
A steady stream of firms have been eliminating pensions over the past decade or so and replacing them with plans that call on employees to bear more of the responsibility for their retirement. The 2008 financial crisis made companies even more wary of promising benefits that they could have trouble funding.
The Post’s existing pension plan was about $50 million, or approximately 20 percent overfunded, last Oct. 1 when Bezos bought The Post.
The newspaper said in a letter to employees that it was doing this “with a goal of better positioning The Post for long-term success.” The company declined to comment further.
“Sadly, rather than cutting costs by sharing them, some companies instead are giving up on providing pensions at all and dumping the responsibility and risk on employees, who are least prepared to handle it,” said Josh Gotbaum, who stepped down last month as the director of the federal Pension Benefit Guaranty Corp.
The letter to employees did not mention changes in company contributions to 401(k) plans, which were cut in a little-noticed section of The Post’s contract with Local 32035 of the Newspaper Guild, a union belonging to the Communication Workers of America. Effective Oct. 1, The Post will cut its contributions to 401(k) plans from a maximum of 5 percent to a maximum of 1 percent for workers in jobs covered by the guild contract.
Instead, The Post will create another cash balance plan that will tap the pension surplus. The payments matching employee contributions to their 401(k) plans are paid out of operating expenses.
The Post had made the same changes in 401(k) matches for non-union-covered employees in 2012.
“The Post once again dropped a bomb on the guild at its first day of contract talks,” said Fredrick Kunkle, a staff writer and co-chair of the union local. “The last time we went to the table, more than a year ago, we said the publisher might have put forward the most contemptuous proposal in memory. We were wrong. We think this one is as bad, maybe even worse.”
Source: The Washington Post