Crain Communications Inc., Detroit, is freezing its defined benefit pension plan, effective Jan. 1, 2012, confirmed William A. Morrow, executive vice president of operations and plan administrator.
The plan was 68% funded as of Dec. 31, 2010; assets as of Aug. 31 were $36 million, Mr. Morrow said in an e-mail.
Participants in the DB plan will be enrolled in the company's existing Service Rewards Plan, a defined contribution plan, beginning Jan. 1, under which contributions, solely from the company, will be based on years of service, Mr. Morrow confirmed. The plan was valued at $7.2 million as of Dec. 31, 2010, he said.
Crain will contribute an amount equaling 2% of salary for those with one to five years of service, 4% for six to 10 years and 6% for more than 10 years.
“The recent reductions in interest rates, and the announced policy of the Fed to keep interest rates as low as possible for the next few years forces private pension funds to expect increasingly higher pension liabilities — and funding requirements — from their actuaries in these upcoming years,” Mr. Morrow said in a separate e-mail. “And these higher funding requirements are coming at a time when companies still have not fully recovered from the strains of the recession.”
“We felt it was in our best interests to have all of our employees in a defined contribution plan,” he said. “Fortunately, Crain already has in place an excellent defined contribution plan, the Service Reward Plan, that is entirely funded by the company and contributes annual contributions to employee accounts in increasing percentages based on years of service.”
Crain closed the DB plan to new participants on Jan. 1, 2004, and has a separate $84 million DC plan.
Crain is publisher of P&I Daily and Pensions & Investments.
