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Union-Tribune employees say they were told Friday via the Copley Press's electronic in-house communications system that the company will no longer put money into the defined benefit pension program. New employees will not get into the defined benefit program, although they will be able to get into the defined contribution program (401K). More significantly, the company will freeze contributions to current employees already in the defined benefit plan. Their money will be there, but the company will no longer contribute to the plan, say employees. The changeover will take place Jan. 31 of 2009, or possibly earlier if the company is sold before then. As recently as two years ago, Copley was saying that the plan was overfunded. Hal Fuson, chief operating officer (and, in effect, chief executive officer), refused to comment on the pension plan -- whether the information I heard from employees was correct, or whether the plan is still overfunded. Nor would he comment on the status of any possible negotiations to sell the company, which put itself on the block last July.

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Comments

JustWondering Dec. 14, 2008 @ 8:26 p.m.

Seems transparency in pension systems is not limited to government employees. These DB plans need to go the way of the dinosaurs whether they're public or private because they are not sustainable.

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Don Bauder Dec. 14, 2008 @ 8:42 p.m.

Response to post #1: In the private sector, companies are going to 401Ks; fewer and fewer have both a defined benefit and defined contribution program, as Copley had. Copley will continue to provide a match to 401K contributions by employees. By the company's own admission, it is severely ailing financially. I agree that having both defined benefit and defined contribution programs couldn't have continued. However, governments aren't so sensible. Of course, 401Ks are providing little comfort these days in one of the worst stock bear markets in history. Best, Don Bauder

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classico Dec. 14, 2008 @ 9:37 p.m.

Whatever else one may say about Copley, the benefits were pretty good, compared to other companies I worked for. Having both a defined-contribution and defined-benefit plan was a wonderful thing. And the company switched its 401(k) to Vanguard a few years ago, which was smart and also a good thing for employees.

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Don Bauder Dec. 15, 2008 @ 6:44 a.m.

Response to post #3: Yes, having both the defined benefit and defined contribution plans was a bonus, although, generally, salaries at the U-T have not been good, considering that the cost of living in San Diego is about 50 percent higher than in the US. Morale suffered in the 2000-2002 and 2007-??? bear markets, obviously, because of the stock market's cratering. (401Ks are now called 201Ks.) Best, Don Bauder

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JohnnyVegas Dec. 15, 2008 @ 10:41 a.m.

These DB plans need to go the way of the dinosaurs whether they're public or private because they are not sustainable.

DB plans went the way of the dinosaur years ago in the private sector. I know if NO private sector company that offers a DB today.

Don, I thought once you're in a DB under the CA constitution it cannot be changed, that's what you hear from the public sector all the time-do you know the laws on this?

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classico Dec. 15, 2008 @ 10:51 a.m.

Response to #4: I didn't work for Copley in expensive California. Regarding 401(k)s, there's no law that says you have to put all your money in stocks.

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Ponzi Dec. 15, 2008 @ 12:18 p.m.

There are still Defined Benefit, Money Purchase, Davis-Bacon and Target Benefit plans being created. But they are for small, family employers or group professional practices. One of the benefits of a defined benefit plan is that large contributions can be made, sometimes 50% or more of income. This allows someone who is older to "catch up" when their practice is more profitable, but they don't hav much in savings.

401K Plans used to be very costly to the average size business because of the cost of administration. But advances in computer software and more firms specializing in benefit administration made it easy for even a company with 25 employees to have a 401K.

But even 401K's can be risky and cost the employer money. Enron is an example of risk. Also when a company has highly paid executive and no one in the rank and file contributing, the corporation has to make a "failsafe" contribution or close down the plan.

Probably the most significant feature of the 401K plan is portability and vesting. Most dfined benefit plans were designed for very long term employees and today people switch job, either voluntarily or not, more often. DB plans had some 7 to 10 year vesting schedules (some of it called "cliff" vesting, which meant if you left earlier you didn't vest at all). Whereas most Profit Sharing/401K plans have 3 to 5 year vesting (of course no vesting on employee contirbutions).

Either way pension plans cost the employer money. You have to look at the "total benefit packaged" and not just the base wage or salary. Companies with a Defined Benefit plan can offer less competetive wages because of the rich retirement benefits. But typically a DB plans ivestments are managed completely by the companies desginated investment advisor. 401K plans allow the employee to self-direct most of their funds.

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Don Bauder Dec. 15, 2008 @ 12:54 p.m.

Response to post #5: I doubt if the CA constitution says a defined benefit plan can't be changed. If that were so, Copley wouldn't have changed its plan. Ditto for other CA companies that have changed their plans. Best, Don Bauder

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Don Bauder Dec. 15, 2008 @ 12:55 p.m.

Response to post #6: Of course, you don't have to put 401K money in stocks. I never had much in stocks, even in the big bull market years. Best, Don Bauder

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Don Bauder Dec. 15, 2008 @ 1:06 p.m.

Response to post #7: Interesting information. In re costs, Copley now has Vanguard doing virtually all its administration. In re cliff vesting, I spent 9 years with Business Week, part of McGraw-Hill. When I left, I got nothing; you had to be there 10. Copley's DB plan was one factor in its paying of low wages; another was the sunshine tax that all San Diegans pay. Yes, employees self-direct their 401K investments. But they have real herd instincts. They will jump into the fund that has done the best over the past 10,5, or fewer years. That's how a lot of people got wiped out in the dot-com, tech bloodbath of the 2000-2002 bear market. The techs had gone gangbusters in the 1990s; the employees jumped in and then got obliterated. Best, Don Bauder

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JohnnyVegas Dec. 15, 2008 @ 2:09 p.m.

Either way pension plans cost the employer money. You have to look at the "total benefit packaged" and not just the base wage or salary.

This is what virtually all public employees do when they cry wolf over their "low wages", they leave out their benefits-which in the case of PD and FD are equal to thei base pay-doubling their wage compensation yet still allowing them to cry poor.

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JohnnyVegas Dec. 15, 2008 @ 2:09 p.m.

Copley's DB plan was one factor in its paying of low wages; another was the sunshine tax that all San Diegans pay.

Everyone but public sector employees.

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Don Bauder Dec. 15, 2008 @ 3:01 p.m.

Response to post #11: In San Diego, particularly the City of San Diego, public sector jobs have better salaries than comparable private sector jobs. And that's just salary. The retirement benefits are MUCH better in the public sector. America is turning into a third world country in which a handful of super-rich people run everything, and the only other people paid well are government employees. The rest are peasants. Best, Don Bauder

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Don Bauder Dec. 15, 2008 @ 3:02 p.m.

Response to post #12: Good point. Best, Don Bauder

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HellcatCopley Dec. 18, 2008 @ 2:17 p.m.

Don, Any rumblings of union organizing in the UT? It might be interesting for a new owner to have to do some negotiating.

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Justice4all Dec. 18, 2008 @ 4:13 p.m.

Now if only the cities, states and schools could get on the ball and convert to defined benefit we might start to reduce these huge deficits.

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Don Bauder Dec. 18, 2008 @ 5:37 p.m.

Response to post #15: I have heard no rumblings of union organization, and I expect none. Those people are scared to death. Nobody would dare start such an effort. Best, Don Bauder

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Don Bauder Dec. 18, 2008 @ 5:41 p.m.

Response to post #16: Do you mean defined contribution? Many in the public sector have both defined benefit and defined contribution plans. The private sector is moving from defined benefit, or both defined benefit and defined contribution, to defined contribution (401K). Trouble is, people have lost their shirts on defined contribution. 401K is now jokingly called 201K. Best, Don Bauder

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