The Richmond, Virginia owner of newspapers and television stations announced in a Web statement Monday that it will close its pension program to employees hired after 2006.
In addition, the company said it will change its method of calculating retirement benefits from using employees’ years of service and average earnings over the last five years of employment to just using final average salary. Employees who retire before year-end and current retirees are not affected by the change, according to the announcement.
To beef up its 401(k) plan, Media General also announced that it was increasing the company match in the current plan to 100% on the first 5% of employee contributions, up from 4% currently, a 25% increase. A profit sharing component will be added to the 401(k) plan, with a target annual employer contribution of 4% of compensation based on the company’s attainment of certain financial goals.
Retiree Health Care
The company also announced plans to set up a retiree medical savings account (RMSA) for all current defined benefit plan participants based on $500 per year of service at December 31, 2006. Account balances will grow at 6% annually until retirement.
Employees hired before January 1, 1992, also have access to certain post-retirement medical benefits, and that will not change. Employees hired after that date will now have a company-funded post-retirement medical benefit.
“These changes follow a comprehensive evaluation of our pension and post-retirement medical benefit plans. Our objectives were to reduce the volatility of future retirement expense while continuing to provide our employees with a meaningful and competitive retirement benefit,” said Marshall Morton, Media General president and chief executive officer. “These changes serve to reallocate our pension costs in a way that will make them more predictable and align employee performance and that of our retirement plans with the company’s performance. We believe these changes will enhance the company’s competitive position and future growth opportunities.”
Media General will provide a detailed update on its retirement plans in its Form 10-Q for period ended June 25, 2006, the company said.