By: Joe Strupp
Gannett this afternoon announced it is freezing the pensions of company employees, according to a memo on the plan sent today from Gannett CEO Craig Dubow.
The change includes a shift in 401(k) match, with employees gaining main Gannett stock for each contribution to their 401(k) fund.
Gannett officials did not respond to requests for comment. The move comes just days after Gannett announced it would write down its assets by about $2.5 billion to $3 billion this quarter to reflect the declining value of its operations in the United Kingdom and the United States.
Gannett plans to save $90 million because of the freeze, and plans to use $60 million of the savings for the 401(k) program, spokeswoman Tara Connell said, according to Reuters. Some employees have said they would like an enhanced 401(k), she asserted.
Reuters reports, “Dubow said in the memo that the 401(k) change makes the company more attractive to employees because they can transfer such plans from job to job.”
A memo from Dubow circulating today, sent to E&P, includes the following:
Beginning Aug. 1, Gannett will freeze the Gannett Pension Plan and improve the Gannett 401(k).
Freezing the Pension Plan means:
– On Aug. 1, your pension plan benefit will be frozen. It will not continue to grow (based on your years of service and final pay) as it did in the past.
– All your benefits currently in the Pension Plan remain there for your retirement.
– A cost-of-living allowance will be applied to your frozen benefit to help protect it from inflation.
Gannett is improving the 401(k). The new match for the Gannett 401(k), beginning Aug. 1, will be:
– Gannett contributes $1 in Gannett stock for every $1 you contribute (up to 5% of your pay).
– Most Gannett employees now receive a 50-cent match for every $1 (up to 6% of your pay).
– This is a large improvement in the 401(k) match.
It is important to know that even with the improved match in the 401(k), nearly all employees at every level will see a diminished benefit.
Freezing the pension plan benefit is another important step in keeping Gannett financially strong. This change will mean a considerable savings for the company even after returning significant dollars to employees through the enhanced 401(k).
I want to stress that today’s benefit change action is unrelated to Monday’s announcement that we will record an approximately $2.3 billion to $2.8 billion, after tax, non-cash impairment charge. They are, however, driven by the same underlying cause: the very difficult business environment.
We are not alone in making the benefit changes. There is a strong, worldwide trend to limit benefits in pension plans and shift to a more 401(k) based system. Also, enhancing the 401(k) plan makes us more attractive to those employees who especially value these portable, self-directed plans.
As a result of these changes, it is now even more important for employees to take responsibility for their own retirement. An important beginning is enrolling and contributing as much as you can to the improved 401(k).
Attached to this email is a booklet, Key Messages for Employees, explaining these retirement plan changes in more detail. Key Messages will answer many of your important questions.
Plus, in the next few days, you will receive a Personalized Benefit Statement, mailed to your home, showing your current benefit in the Pension Plan (this is the amount that will be frozen beginning August 1st) and information about the 401(k).
There is also a telephone Helpline, opening on June 12th, that can answer your questions about the Personalized Benefit Statements.
Your operating unit head and/or HR representatives received a briefing about these retirement plan changes earlier today. In the upcoming days, as they become more familiar with the change, they can also play an important role in explaining this change.