At least partly prompting the move, according to a company news release, were the passage of the Pension Protection Act and anticipated regulatory changes related to defined benefit plans.
According to the announcement, the company will add five years of service to the pension calculations of affected workers on the effective date of the freeze. Belo will also make supplemental annual contributions to their 401(k) accounts covering the five-year period from April 1, 2007 through March 31, 2012, if they remain employed by Belo at the end of each respective year from 2007 through 2011 and at March 31, 2012, the company said.
The statement said that the transition benefits are designed to approximate on average what affected participants would have received if the pension plan had continued for another ten years.
Meanwhile, current participants in Belo’s Pension Plan will stop earning additional pension benefits after March 31, 2007, and will begin participating in the company’s enhanced 401(k) Belo Savings Plan which includes an automatic contribution of 2% of employees’ eligible compensation and a company match of $0.75 for each dollar contributed by employees, up to 6% of their eligible compensation.
The change in retirement benefits will affect approximately 2,300 of Belo’s 7,400 employees. Belo’s other eligible employees already participate in the Belo Savings Plan.
“I believe the changes announced by Belo today fairly address both the interests of the company and all employees,” Robert Decherd, Belo’s chairman, president and chief executive officer, said in the announcement. “In determining the specifics of the revisions, we paid particular attention to the needs of employees who may retire within the next ten years and then extended benefits on the same basis to all affected employees. The goal is to manage ongoing retirement benefits responsibly in order to ensure Belo’s long-term prosperity. Together with other tough choices we’ve made during 2006, this decision will strengthen our company’s ability to compete successfully in the future as our industries continue to change rapidly.”
With the pension freeze, Belo joins the ranks of a long line of companies making the DB to DC transition (See NCR Announces Pension Freeze ).