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Yesterday afternoon, I posted an entry indicating that severely-ailing Copley Press will no longer be putting money into its defined benefit pension plan, although older employees will still have access to their money. New employees will not have such a plan. The change goes into effect Jan. 31, unless the company is sold earlier (unlikely). Copley saved itself money choosing that 2009 date. The euphemistically-named Pension Protection Act of 2006 made it more difficult for those preferring lump sum settlements instead of annuities (monthly payments). When interest rates go down, lump sum payments go up. The act of 2006 phased in the use of corporate interest rates instead of Treasury rates, which are lower. This year, 80 percent of the payment is determined by the T rate (now quite low) and 20 percent the corporate rate (significantly higher). Next year, the breakdown is 60-40. Thus, those electing to take the lump sum may lose 5 to 15 percent because the date was shifted to 2009. Also, according to the Pension Protection Act of 2006, if the funded status falls below 80%, the plan may not pay full lump sum benefits, and if the funded status falls below 60%, the plan may pay no lump sum benefits at all. The 2006 act also said that for employees in frozen plans, there may be several years in which lump sum values do not increase, or possibly even decrease. On Sunday night (Dec. 14), Hal Fuson, de facto chief executive of Copley Press, declined to comment in any respect about the plan, including on its funded status. (I was on the Copley pension committee from the late 1970s to my retirement in 2003. In my later years, including 2003, I believed that the fund had too much of its assets in stocks generally, and too much in tech stocks particularly, although nobody else on the committee agreed with me. This doesn't mean, however, that the fund has fallen below the 80% or 60% thresholds.) I called Fuson today to give him a chance to comment; he was not available. I said I would post the item, but if he wanted to change his mind and comment on his company's gains from the Jan. 31 strategy, or on the funded status, I would post his comments.

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Comments

JohnnyVegas Dec. 15, 2008 @ 10:45 a.m.

It is very bad news-but if the company is bleeding red ink-which it probably is based on Copley's decision to sell- then it has to be done.

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Visduh Dec. 15, 2008 @ 11:52 a.m.

Will there be a piece in the U-T that reports this elimination of the DB plan? They do, in a bloodless way, actually report on news that affects the U-T and its employees. Usually. Let's see if this one makes it.

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Don Bauder Dec. 15, 2008 @ 12:22 p.m.

Response to post #1: We still don't know if the cash flow ink is red or very, very light gray. The company has told employees that it's the latter. I'm not so sure. Best, Don Bauder

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Don Bauder Dec. 15, 2008 @ 12:51 p.m.

Response to post #2: They leave a lot of the negative news out of the U-T, thus cheating readers. For example, when was the last time you saw a report about the Audit Bureau of Circulations data coming out twice a year and showing Copley's sharp decline? I don't remember seeing it for years. I don't remember whether the company printed any news about its employee buyouts. I'm sure it didn't about its layoffs. Best, Don Bauder

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HellcatCopley Dec. 15, 2008 @ 4:40 p.m.

You can also read between the lines and realize that whatever buyer the UT finds will have the employees at ground zero in benefits. Copley saying no more retirment now means a buyer won't have to say it in the future.

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Don Bauder Dec. 15, 2008 @ 7:28 p.m.

Response to post #5: Yes, you can interpret this as a new buyer asking Copley to do the dirty work. Best, Don Bauder

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