New Hope sinking, trolley at night, Southeast firemen, Frost Hardwood Lumber, sea urchins, Jim “Mouse” Robb
Rick Geist 8:30 a.m., Sept. 14
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.