Update: Statement issued by Guild on April 30

Through April 30, 2010, in addition to all other benefits, the Plan will continue to pay lump sum severance benefits to employees who retire, or are terminated, laid off or who may accept a voluntary layoff or in the case of death. The Plan is paying all current benefits and continues to fulfill all of its obligations to our retirees and their beneficiaries.

Developments

– Inquirer Guild retirement fund lost $72 million in 2008, or one third of its value.
– Funding status called “critical” by pension trustees in April 28 mailing to Guild members and retirees.
– One year from now, benefits could be reduced, lump sum payments suspended (details below) and early retirement benefits reduced.
– Additional materials from trustees

Our pension manager provided the following answers to two key questions regarding existing benefits and severance:

Q. If a person is collecting a pension benefit now, or opts to do so prior to any formal declaration on the fund status, will that person’s monthly benefit be reduced in any way by the actions of the trustees?

A. No, the Board can only reduce future benefits, not benefits already in pay status or already accrued.

Q. If the fund trustees suspend “lump sum payments” as mentioned in the letter, does that mean that newly retiring employees [after that date] will not receive their Guild severance payments as specified under the contract?

A. If lump sums are suspended due to “red zone” requirements, as the law currently provides, severance payments would have to be paid in the
form of an actuarial equivalent monthly annuity.

Perspective

Before the merger of our pension plan into a multi-employer plan, we would have been eligible for a federally guaranteed maximum pension far in excess of what can be expected now if the fund turns to the Pension Benefit Guaranty Corp. for help.

As reported in the St. Louis Post-Dispatch:

Funding problems are particularly important for such multi-employer plans, because they carry less federal insurance than single-employer pension funds. The federal pension insurer Pension Benefit Guaranty Corp. guarantees only up to $12,870 in annual pension payments to a member of a multi-employer plan, and a complicated formula used by the agency means that many members would get less. By contrast, the PBGC guarantees up to $54,000 a year in payments to a member of a single-employer pension plan.