Innovative Pension Plan Proposed By Guild

Details of the News Media Guild’s “Fixed Cost” Pension Proposal

In January 2011, the News Media Guild proposed a new pension plan it believes can pave the way for stabilizing similar plans nationwide. The Guild believes that pension plans are the best way for workers to save for their retirement, and our new proposal makes operating the plan safe and predictable for the Employer.

The plan, called a fixed-cost plan, addresses the concerns raised by Associated Press, which simply proposed “freezing” the current plan and putting workers into a DC, or defined contribution plan.

Associated Press, like many employers, now objects to “volatility” in the traditional pension plan, saying that market declines can cause unexpected, large contributions instead of a regular, known cost. Although the current plan’s design allowed the employer to sometimes have the benefit of “skipping” annual contributions,  the combination of the global stock market downturn, new laws, and new regulations now make stable, predictable retirement plans preferable for some employers.

NMG’s “Fixed Cost” plan defines on the front end how much the employer contributes each year. Then, it “self-adjusts” its benefit accrual rate with market conditions. Combined with a gradual switchover to a high-stability, lower risk investment strategy, the NMG plan almost eliminates volatility while retaining many of the best features of a traditional pension plan: guaranteed lifetime payments for retirees and their spouses, actuarial efficiency, professional asset management, and federal insurance. No DC plan can offer all of these features.

NMG is urging AP to adopt this plan to protect the retirement of the journalists and other news industry workers we represent. And we thank you for supporting us.