For years, The San Diego Union-Tribune has socked money away in not one but two retirement plans for employees. The benefits employees receive are about to change.
The Copley Press, owner of the San Diego Union-Tribune, announced Friday that it will freeze all benefit accruals for the employee pension plans on Jan. 31 or the day of the sale of the paper, whichever comes first.
Employees will still receive pension payments upon retirement, but they won’t receive more money based on future earnings.
A memo sent to U-T employees blamed “economic conditions” for the demise of the pension but didn’t elaborate. It said employees hired this year will not be able to participate in the pension plan at all.
Up until now, the paper contributed to both 401(k) and pension plans.
The newspaper has not announced any plans to cut matching contributions to 401(k) plans.
It’s unclear whether the company’s pension decision is designed to make the newspaper look more appealing to potential buyers. The U-T has been for sale since July.
Traditional pension plans, which give employees pre-determined benefits after retirement, have been in decline during this decade.
Many employers have turned to 401(k) plans instead. In 401(k) plans, employers create funds that workers can invest in the stock market; employers typically match contributions that workers make.
The U-T sets itself apart from other companies by offering both a traditional pension plan and a 401(k) with matching contributions, said media analyst Ken Doctor of the Outsell consulting firm.
“Usually, especially in recent years, they have one or the other,” he said. In fact, many companies have been replacing pension plans with 401(k)s, he said.
The U-T began offering matching 401(k) contributions to non-management employees about 10 years ago; prior to that, only workers in management got them, a former employee said. The newspaper’s move came after U-T workers voted in 1998 to cease representation by the Newspaper Guild, a labor union that represented nearly 900 employees.
Clarification: The original version of this post may have caused confusion by saying that the newspaper was halting pension contributions. The memo sent to employees states that it is freezing employee benefit accruals.The plan remains in place and employees with pensions will receive payments but employees will no longer accrue benefits under the plan. The memo doesn’t discuss the company’s contributions to the plan.