According to the Associated Press, the Newspaper Guild of Greater Philadelphia has agreed to end a lawsuit brought over the proposed merger of the pension plans. That lawsuit had charged that one of the plans was severely underfunded and that the merger would endanger the health of the second (see Newspaper Union Moves To Block Pension Merger ).
Under the settlement, the guild said, it will merge its $193 million pension fund with the United Independent Union Pension Plan, a $10 million fund with 700 participants from 10 employers. That new combined plan – to be controlled by a board with representatives from the union, the independent plan and the papers’ owner, Philadelphia Media Holdings – will then absorb the company-controlled North Broad Street plan.
The settlement satisfies the union because it doesn’t give the company control over the guild plan, according to the AP. The union was worried the company would take $8 million from the guild plan to bring the $7 million North Broad plan into compliance with federal rules. The agreement allows the company to satisfy the rules without adding the $8 million to the North Broad plan because the plan is now part of a much bigger plan that is fully funded, according to the union, which told employees about the settlement in a memo Thursday.
Under new federal pension fund rules, a plan cannot make lump-sum payments to retirees or terminated employees unless it is fully funded. The North Broad plan, which was set up specifically to make severance payments, was only 39% funded on January 1, 2007, according to the AP, citing court documents. However, merging the North Broad plan into the other fully funded plans satisfies the new rules. The deal is expected to be completed July 30.
The merged fund will be called the United Independent Union-Newspaper Guild of Greater Philadelphia Pension Plan.
District Court Judge Berle M. Schiller granted a temporary restraining order, which was extended several times with July 31 as the latest deadline (see Judge Extends TRO on Pension Merger ).