The Associated Press would freeze its defined benefit pension plan and set up a new defined contribution plan under a tentative agreement reached last week with The News Media Guild.
Employees no longer would earn benefits in the plan after June 30. Instead, AP would contribute an amount equal to 6% of employees' salaries to a defined contribution plan if the 33-month contract is ratified.
In addition, employees who have at least 10 years of service will receive an additional annual contribution equal to 2% of their salaries for the next eight years, while those with less than 10 years of service will receive an additional contribution equal to 1% of their salaries, according to the AP and the Guild.
If an affected employee hits the 10-year service mark during that eight-year period, the individual would be entitled to additional 2% credit.
The AP stopped offering a defined benefit pension plan to Guild employees hired as of March 2006.
The news service said it sought the pension freeze in the latest contract to help reduce costs and a more than a $100 million funding shortfall in the plan.
It estimates the latest freeze would affect about 950 Guild employees.
Also, as part of the agreement, AP would not increase health insurance premium rates paid by employees during that time.
The Guild said the proposed agreement will be sent to members shortly.
Numerous news organizations have frozen their pension plans in recent years amid a sharp decline in revenues, including media giant Gannett Co. Inc., which did so in 2008; McClatchy Co., which froze its pension plans in 2009, and Journal Communications Inc., the publisher of the Milwaukee Journal Sentinel. Journal Communications' pension plan freeze began Jan. 1.
Jerry Geisel is editor-at-large at Business Insurance, a sister publication of Pensions & Investments.