A negotiations summary from AP's employee relations director says the News Media Guild "took an important step and acknowledged that the old pension, a defined benefit plan which most other companies in our industry have phased out, was no longer sustainable if the AP is to remain competitive. The Guild presented a counterproposal which provides a freeze of the defined benefit plan and replaces it with a defined contribution plan." She adds:

Astonishingly, the cost of the Guild’s defined contribution plan – estimated to be $30.8 million over five years – is twice the cost of the company’s proposal. The Guild’s counterproposal further impedes resolution because its costs would only continue to grow beyond the initial five years, which is when AP’s plan would show the most savings.

The full summary is after the jump.


This summary of AP-News Media Guild negotiations on Tuesday was sent late Tuesday night to AP news leaders and department heads by AP director for global labor and employee relations Michelle Ehrlich

Today [Tuesday], the News Media Guild took an important step and acknowledged that the old pension, a defined benefit plan which most other companies in our industry have phased out, was no longer sustainable if the AP is to remain competitive. The Guild presented a counterproposal which provides a freeze of the defined benefit plan and replaces it with a defined contribution plan.

Astonishingly, the cost of the Guild’s defined contribution plan – estimated to be $30.8 million over five years – is twice the cost of the company’s proposal. The Guild’s counterproposal further impedes resolution because its costs would only continue to grow beyond the initial five years, which is when AP’s plan would show the most savings. Since January the AP has explained that those savings would be used to stabilize and grow its position in the marketplace.

There is very little time left to solve this. A pension freeze must be in place by July 1 and will take months to administer under pension regulations, so the process must begin very soon. If the pension is not frozen, cuts will have to be made elsewhere. And as [Human Resources VP] Jessica Bruce said in her note to staff last week, personnel costs are the company’s biggest expense.

The talks, which began last year, have been dragging on for months. The future of the company rests on a swift and reasonable conclusion to negotiations.

Without a pension freeze, AP’s costs will be $65 million higher over five years than with one. As you know from Jessica’s note, this is not tenable. By agreeing to move away from a defined benefit plan, the Guild shows it is recognizing this. Now the gap on costs must be eliminated.

Specifically, the Guild proposal removes employees’ incentive to save for retirement and calls for an end to the company’s 401(k) match (currently 3% - up to half of the first 6 percent that Guild employees contribute to the plan) and a tiered system of contributions to a defined contribution plan based on length of service. Contributions would range from 9 percent for new employees to 15 percent for those with 25 years or more of service.

The AP has proposed contributing 3 percent of an employee’s salary to the new defined contribution plan, in addition to the current 401(k) match. To ease the transition away from the defined benefit plan, an additional contribution of 2 percent or 1 percent, depending on years of service, would be made for seven years.

The AP has asked the union for the financial details behind its proposal.

Negotiations resume Wednesday.

Present today for the AP were Steve Macri, Michelle Ehrlich, Sue Gilkey, Alison Quan, Hilda Auguste, and Carole Feldman.

Present today for the News Media Guild were Tony Winton, Kevin Keane, Martha Waggoner, Don Ryan and Vin Cherwoo.

Kathy Murray Cannon assisted with the talks.

Please forward this message.

Regards,
Michelle