Effective August 1, Gannett will freeze its pension plan, with participants no longer accruing benefits. At the same time, Gannett will enhance its 401(k) plan by matching employees’ salary deferrals, up to the first 5 percent of pay, with company stock. Gannett now matches 50 percent of employees’ salary deferrals up to the first 6 percent of pay, also in company stock.
McLean, Virginia-based Gannett says it is moving away from its defined-benefit plan to save money.
“Freezing the pension plan benefit is another important step in keeping Gannett financially strong. This change will mean a considerable savings for the company even after returning significant dollars to employees through the enhanced 401(k) plan,” Gannett CEO Craig Dubrow wrote in a memo to employees.
The change affects nearly all of Gannett’s roughly 25,000 employees in the U.S., a Gannett spokeswoman said.
Gannett, which publishes 85 daily newspapers, including USA Today, and operates 23 television stations in the U.S., last year reported $1.05 billion in net income on revenue of $4.9 billion.
Earlier this week, Gannett said it would write down its assets by between $2.5 billion and $3 billion to reflect the declining value of its operations in the U.S. and Great Britain.
In freezing its pension plan, Gannett joins a long line of large and well-known U.S. companies—including Hewlett-Packard, IBM and Sears Holdings—that have done the same.
Last year, for example, 52 percent of Fortune 100 companies offered a defined-benefit plan to new salaried employees, a steep decline from 2002, when 83 percent did so, according to a recent Watson Wyatt Worldwide survey.
Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail email@example.com.