Consumers Union, Yonkers, N.Y., reached a new collective bargaining agreement with the Newspaper Guild of New York to create an “adjustable pension plan” that will replace the standard defined benefit plan for guild members, confirmed Bill O'Meara, president of the guild.
Under the new pension plan, the employer will contribute a fixed 6% of salaries plus $100,000 each year to the plan. The retirement benefit will then be calculated each year on an adjusted basis depending on the plan's performance in the prior year. The company would then have no further financial commitment or unfunded liabilities to the plan.
“It will vastly reduce risk and volatility for the company and still provide a lifetime payment and PBGC insurance,” Mr. O'Meara said in a telephone interview.
Consumers Union, the parent of Consumer Reports magazine, becomes the second company to adopt the adjustable pension plan. The New York Times was the first company to do so in November, also for its members of the Newspaper Guild of New York in its $280 million plan. Both plans still need IRS approval on the new structures.
“We're hoping that this becomes a national model for others to adopt,” Mr. O'Meara said. “There is some upside potential and very little downside for employees.”
The adjustable pension plan was developed by guild actuaries at Cheiron.
The existing pension plan will be frozen on May 31, and contributions to the adjustable plan will start June 1. The pension plan had about $42 million in assets as of Dec. 31, 2011, according to the company's most recent Form 5500 filing.