The contract announced today would, according to the Associated Press, freeze a longstanding defined benefit pension plan. Future retirement contributions would be at least 6% of salary annually, made to a defined contribution account, and the match would be eliminated for union-covered workers (this would allow employees to receive the full contribution whether or not they contributed). The pension plan’s fate had been a major sticking point in the talks, according to the report.
In exchange for the freeze, the AP agreed not to increase employees’ health insurance coverage until the contract expires in August 2013. The contract also includes three raises of 1.5% each.
AP sought the pension freeze to help lower its costs in the future and make up for a more than $100 million shortfall in the plan. “These were very difficult talks, covering difficult topics in uncertain economic times,” said Jessica Bruce, the AP’s vice president of human resources in an Associated Press report. “With this agreement now in place, AP and its staff can now focus their attention and energy on the initiatives critical to driving revenue so that AP can stay competitive and maintain its leadership in the media marketplace.”
The AP already had stopped offering the traditional pension plan to management employees hired since 2005 and union-covered employees since March 2006. Those newer employees receive 3% of salary in the defined-contribution plan (for union employees, the AP contributes up to 3% of salary to a 401(k)).
Besides the 6% contribution, employees affected by the pension freeze would get an additional contribution of 1% or 2% of pay to the defined-contribution plan over the next eight years, depending on how long they have been with the company.
The union said the pension freeze would affect about 950 of the 1,200 covered by the new agreement.
The agreement came after the union threatened to file allegations of unfair labor practice and management threatened to withdraw several of its key proposals.
The union says it hopes to schedule a vote by June 1.