The News Media Guild advanced a new pension proposal Wednesday aimed at preserving the best features of the current traditional plan while addressing the Associated Press’s stated concerns of volatility and predictability.
The Guild’s proposal would put all employees and all new hires into the plan.
The plan, called a “fixed cost plan” is similar to the current plan in that it remains a federally insured defined benefit plan that pays a lifetime monthly benefit at retirement. However, unlike the current plan, the accrual rate is adjusted each year to take account of market conditions.
The plan also calls for AP to shift the investment strategy of the plan assets into more stable bonds.
“The Guild’s actuaries say volatility is reduced 90 percent to 95 pcercent by this plan, and the company will realize a significant savings,” said NMG President Tony Winton. “While this plan represents a sacrifice to meet AP’s needs, it still is vastly superior to the company’s DC plan proposal.”
The current pension plan has a fixed accrual rate of 2 percent of salary. Under the Guild’s proposal, the Guild would negotiate the amount of money AP would contribute to the plan each contract cycle — meaning that AP’s costs would be predictable each year.
With the contributions (known as the “normal cost”) then fixed, the accrual rate would be adjusted. The Guild proposed that contributions for the three-year contract it is proposing remain the same as the current pension “normal cost.”
In terms of benefits, that means for each year of employment, an additional monthly, lifetime pension payment would be earned. However, the size of the “added” benefit each year would change, depending on market conditions. But, critically, once a benefit is earned, it can’t be lost.
The company said the Guild had given the company “a lot to think about with this proposal.”
Representing the Guild were Winton, Martha Waggoner, John Braunreiter, and Kevin Keane, along with Guild actuaries Karen Zangara and Richard Hudson of Cheiron.
Representing AP were Michelle Ehrlich, Sue Gilkey, Carole Feldman, Hilda Auguste, Alison Quan and attorney Steve Macri.
Bargaining resumes at 1 p.m. Thursday when the two sides will hold another human rights day.