Guild proposes new retirement plan for AP staff

The News Media Guild on Tuesday proposed an alternative defined contribution plan that calls for contributions as high as 15 percent of pay after AP said it would not accept the Guild’s earlier “fixed cost” pension plan proposal. The alternative plan, which saves the company $18 million over five years, was developed by the union’s actuaries as an equitable alternative, resulting from AP’s insistence on freezing the pension plan.  

The AP had set $18 million as its savings target earlier in the talks.

The Guild’s pension proposal would have reduced risk by 95 percent. Because AP’s DC proposal doesn’t reduce any risk, but merely transfers all the risk to the staff, the union developed a plan that compensates for this burden, as well as loss of federal insurance protection, actuarial efficiency, and professional funds management.  

“This proposal does not do as well for staffers as the Guild’s fixed cost plan, and it’s riskier and inefficient,” said Tony Winton, NMG president. “However, it represents the Guild’s determination to accommodate AP’s risk, liability, and cost concerns in an equitable manner for employees, especially the newer hires — who are ignored in AP’s DC proposal.” 

The Guild’s DC proposal has two components:

1. The existing 401(k) would be altered. The current employer matching funds (50 cents on the dollar up to 3 percent) would be moved into the DC plan, but as a 3 percent guarantee, not a match. Nearly 300 AP staffers now get no matching funds at all. With the move, all staffers would get those funds — particularly benefiting staffers in lower-paying classifications and staffers with tight budgets who haven’t been able to use the 401(k) to save. The 401(k) plan itself would remain, so that staffers could save their own money in the plan on a tax-deferred basis. 

 2. The DC plan would become a tiered plan for ALL employees with increasing levels of contributions based on length of service. 

The Guild’s proposed tiers, including the “moved” 401k funds above, would look this way:

 0-10 years of service: 9 percent  contribution

10-15 years of service: 10 percent

15-20 years of service: 11 percent

20-25 years of service: 13 percent

25+    years of service: 15 percent

The Guild’s proposal is very different from the AP’s DC plan because it treats all staffers the same way. Current DC enrollees would see a bump in their contribution rate starting immediately and  additional increases going forward. Staffers now in the pension would be compensated for the loss of future accruals, based on their length of service. 

Earlier in the talks, AP told the Guild that it would have to pay $90 million over a five-year period if the pension plan were not  frozen. With a  freeze, AP saves $48.8 million. The Guild’s DC plan would cost $30.8 million, leaving AP with its targeted savings of $18 million.