"Can't Stop Thinking About Tomorrow"

The Guild made a formal presentation of its proposed improvements to its defined benefits (pension) plan to the Post Bargaining Committee on Wednesday, Sept. 28. Bob Patrician, a Communications Workers of America research economist, analyzed the finances of the Post-Guild Plan, and spoke for the Guild Bargaining Committee.

“Over the past ten years, the Washington Post Company has been making money hand over fist,” Patrician prefaced, “some $2.5 billion, with 31% of that in the past three years.” He went on to emphasize that the cost of one year of Guild-covered pension benefits was $3.9 million in 2003, while the Plan earned more than $49 million in investment returns – 12 times as much as it paid out that year.

The Post-Guild Pension Plan was established July 30, 1979 and was achieved by the Guild through the collective bargaining process. The Post has sole control over management and investment of the fund but cannot spend the money for any purpose other than retirement benefits for Guild-covered employees. The recent early retirement buyouts of 2003 were paid for from this fund – a one-time charge of $18 million.

The Post is obligated to pay into the Plan to support the benefits guaranteed by the Plan, however, the Post has NEVER had to do this. At the end of 2003 (the latest date for date' for which we have data), the Plan assets totaled an estimated $336,384,822. The Projected Benefits Obligation (benefits which must be paid out) were $157,915,747 in 2003, leaving $178,469,075 as excess assets. This means that the Post-Guild Pension Plan is funded at a whopping 213%.

Certainly the conservative and prudent investment and management strategies that the Post has pursued over the years have contributed to the robust health of the Plan. However, we cannot overlook the effect of the extension of these strategies to the actual payout of benefits. The less the Plan pays out in benefits, the I more assets the Plan retains. The Post has grown and prospered over the years, but the financial fate of Guild-covered employees at retirement has remained relatively flat.

One of the most significant and immediate benefits this well-funded Pension Plan provides to the company is its contribution to the bottom line. Patrician pointed out that the Post-Guild Pension Plan accounting contributed some $18 million toward company profits over the last three years.

The Guild achieved an equitable increase for employees retiring in 2002 and beyond, including the many who retired under the terms of the buyout – the first improvement since the plan's inception. The Guild's aim for this contract is to continue making pension benefit improvements. Patrician detailed the specifics:

1. Eliminate the current 30-year cap on credited service. Employees should receive credit for all years of service in calculating benefits.

2. Further reduce the Social Security offset percentages to .56%, .53%, and .50%, from .62%, .59%, and .56%. This means that a lesser amount of employees’ Social Security, benefits will be deducted from pension benefits, resulting in increased pension payouts.

3. Increase accrued benefit percentage for early retirees from age 55 to age 59. Currently, if you retire at age 55 you receive 40% of your accrued benefit. The Guild is Proposing 55% for age 55, 60% for age 56, 65% for age 57, 70% for age 60, and 75% for age 59.

4. Adding the "Rule of 90." If the sum of the employee's age plus the employee's continuous services add up to 90, then the employee will be able to retire with 100% of his/her accrued benefit without reduction for early retirement. The “Rule of 90” is an important part of an exempt employee’s Pension Plan, which was improved by the Post seven months after the Guild improvements took effect in November 2002.

5. Increase the Cash Pension Supplement – an annual cash payment that many retirees use to offset the rising costs of health care – from $200 for each year of service to $250 for each year of service. This means a retiring 30-year employee’s annual cash supplement would increase from $6,000 to $7,500.


Patricia Dunn, Post Lead Negotiator, responded to the Guild's presentation by calling the overfunding an “enviable position” in the current climate of pending pension reform legislation and poor asset performance of many other defined-benefit plans. Dunn stated that the Post was disinclined to improve the Post-Guild Plan again, claiming that such improvements would jeopardize employees’ benefits in the future.

“I’m pleased that the Plan is well-managed and continues to grow,” Patrician responded. “The pending legislation will indeed be onerous for some employers,” he continued, “but NOT the Post.” He went on to say that the Post-Guild Plan would NOT be affected by the pending pension-reform legislation.

Companies today whose defined-benefit plans are funded at levels of 110-160% are considered well-off. At 213%, the Post-Guild Plan is much richer than that. The Post's claims that it is protecting people's benefits 10, 20,50 years into the future do not compute. It is clear that a modest increase in people's benefits now will not jeopardize those benefits in years to come.

“The economic climate is such that the cost of living has increased, the pension plan is in wonderful shape, and the Post can certainly afford to improve benefits,” concluded Rick Ehrmann, the Guild’s chief negotiator.

A Concrete Example
Assuming 30 years service and retirement in 2006 at age 65, and a Final Average Compensation (over three years) of $42,446 (the average for Commercial), and $81,551 (the average for News), the Guild-proposed increase over the current benefit would be 10.3% for commercial and 5.7% for news, a “reasonable and responsible” proposal in the words of Rick Ehrmann.

Other Topics of Discussion This Week...
1. The Post’s proposal to provide check-stub information electronically instead of by mail (more details to follow).
2. The Post’s proposal to delay payout of compensatory days, limit compensatory time pay-out to 10 days per year, and place time limits on reimbursements of expenses.
3. The Guild’s proposal on parental leave, which would provide more flexibility and fairness to enhance the family-friendly nature of this benefit.

"No Worker Left Behind"

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