Belo Freezing Its Pension Plan In March

By: E&P Staff Dallas-based Belo Corp. said Thursday it will freeze The G. B. Dealey Retirement Pension Plan effective March 31, 2007, in a move that will affect approximately 2,300 of its 7,400 employees.

Employees participating in the defined-benefit pension plan will be to into the 401(k) plan that covers other employees.

Belo Chairman Robert Decherd said that the company is moving employees out of the defined-benefit plan because of recent legislation and expected regulatory changes in how companies must account for the plans.

"While the legislation is well-meaning, it causes estimates of future pension obligations to increase dramatically and creates long-term volatility of costs for companies that continue to offer defined benefit pension plans," Decherd said in a statement.

Belo said it would provide "significant transition benefits" to employees affected by the change. Five years of service will be added to their pension plan on the effective date of the freeze, Belo said, and it will make "supplemental" annual contributions to their 401(k) accounts covering the five-year period from April 1, 2007 through March 31, 2012, assuming they remain employed by Belo at the end of each year through 2011, and at March 31, 2012.

"Together, the transition benefits are designed to approximate on average what affected participants would have received if the pension plan had continued for another ten years," Belo said.

Pension plan participants will cease earning additional pension benefits after March 31, 2007, and will be switched to the "enhanced" 401(k) Belo Savings Plan, the company said. The plan includes automatic contribution of 2% of employees' eligible compensation and a company match of 75 cents for each dollar contributed by employees, up to 6% of their eligible compensation.

Former employees who left the company with a vested benefit will not be affected, Belo said.

Newsroom employees at The Dallas Morning News who recently accepted a voluntary severance offer, and were in the pension plan "will be given the opportunity to receive a modified severance package that includes adding five years of service to their pension plan calculations," Belo said.

The changes come days after 18 former Morning News employees sued the pension plan, the newspaper and Belo alleging they were terminated during a 2004 layoff because of their age.

Decherd said the changes "fairly address both the interests of the company and all employees," and that Belo had paid particular attention to the needs of employees expected to retire within the next ten years.

"The goal is to manage ongoing retirement benefits responsibly in order to ensure Belo's long-term prosperity," he said. "Together with other tough choices we've made during 2006, this decision will strengthen our company's ability to compete successfully in the future as our industries continue to change rapidly."

Belo said it "expects to realize substantial savings in both cash contributions and pension expense over time."