Gannett Freezing Pension Plan Improving 401(k) by wxv15919

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									                                            Gannett
                                     Freezing Pension Plan
                                       Improving 401(k)

                          Key Messages for Employees

                                       This “Key Message” document is an overview describing changes to
                                       Gannett’s retirement plans.

                                       Please don’t use this “Key Message” document to plan your
                                       personal retirement. The correct document for understanding your
                                       particular details is your Personalized Benefit Statement (described
                                       on page 7 of this document).

                                       This “Key Message” document is an overview. You cannot tell from
                                       this document how these changes will affect you personally.

                                       These changes, freezing the Pension Plan and improving the
                                       401(k), impact more than 25,000 employees.

                                       But there are many individual differences:
                                        • Because Gannett grew by acquisitions, different companies
                                            had different retirement plans, so not everyone is at the same
                                            starting point
                                        • Some employees are represented by a labor organization and
                                            have different plans
                                        • Outcomes vary widely depending on years of service and pay

                                       Effects also depend on a number of factors, including:
                                        • How much you contribute to your 401(k)
                                        • How long you have worked at Gannett
                                        • How your chosen investments perform
                                        • Other economic variables such as cost-of-living increases


                        Page 1                 This Title Page
                        Page 2                 Review - Gannett and Your Retirement Income
                        Page 3                 Changes to Retirement Benefits
                        Page 4                 Special Additional Contributions Into 401(k)
                        Page 5                 Improved 401(k)
                        Page 6                 Freeze’s Estimated Effects - Employees With 10 or More Years Service
                        Page 7                 Freeze’s Estimated Effects - Employees with Less Than 10 Years Service
                                               and Executives
                        Page 8                 Personalized Benefits Statements
                        Page 9                 Why Gannett is Freezing the Pension Plan
                        Page 10                Pension Plan Security
                        Page 11                Legal Disclaimers


Gannett Freezing Pension Plan - Key Messages                                                          Page 1 of 11
                          Review
            Gannett and Your Retirement Income
           Gannett helps employees save for retirement in three ways: Pension Plan, 401(k), and Social Security.


      Pension Plan                                         What is the Pension Plan?

                                                           •   In most cases, only Gannett contributes money to
                                                               your pension plan — you do not contribute
                                                           •   All pension plan assets are set aside in a secure trust
                                                           •   Gannett decides how to invest this money
                                                           •   Gannett promises you a specific benefit and must
                                                               manage the investments to make sure it can pay




      401(k)                                               What is the 401(k)?

                                                           •   The 401(k) is another way Gannett helps you save
                                                               for retirement
                                                           •   You choose to contribute or not
                                                           •   You decide how to invest your money (10 funds to
                                                               choose from)
                                                           •   When you retire, Gannett does not promise you any
                                                               particular benefit amount
                                                           •   Whatever is in your 401(k) is what you get


                                                           The most important thing to know about 401(k):

                                                           •   In general, if you don’t enroll in the 401(k) or
                                                               contribute nothing, Gannett contributes nothing
                                                           •   You decide how to invest the money in your 401(k)
                                                           •   What you get at retirement depends on your
                                                               contributions and investment decisions


                                                           Gannett’s 401(k) Web site: www.ybr.com/gannett




      Social Security -                                    Gannett contributes 6.2% of your pay into Social Security
                                                           - and you contribute 6.2% as well. This happens
                                                           automatically.




Gannett Freezing Pension Plan - Key Messages                                                    Page 2 of 11
                  Changes to Retirement Benefits
                                    Gannett is freezing the Pension Plan and improving the 401(k).

    Pension Plan                                           What does “frozen” mean?
    Frozen                                                 •   As of August 1st, your benefit in the Retirement Plan is
                                                               frozen


                                zen
                                                           •   Before the freeze, the benefit used to grow based on
                                                               years of service and your pay


                       Fro
                                                           •   After the freeze, the benefit is whatever it is on August
                                                               1st, and it does not grow based on years of service and
                                                               your pay
                                                           •   However, Gannett will protect your frozen benefit from
                                                               inflation by applying a cost-of-living allowance
                                                           •   This cost-of-living allowance continues until Gannett
                                                               begins paying your benefit
                                                           •   This will help stop your frozen benefit from being eaten
                                                               away by inflation
                                                           •   For example, cost-of-living allowance for 2007 was
                                                               2.2%
                                                           •   The cost-of-living allowance does not replace the value
                                                               of what your benefit would have grown to if the Pension
                                                               Plan had not been frozen




    401(k)                                                 What is the improvement?
    Improved
                                     d
                                  ve
                                                           •   Gannett is improving the “match”


                               pro
                                                           •   Gannett contributes $1 worth of Gannett stock for every
                                                               $1 you contribute (up to 5% of your pay)

                       Im
                                                           •   This is an immediate 100% return on your investment
                                                               (assuming you are fully vested)*
                                                           •   For most employees, this is a big improvement
                                                           •   In the past, for most employees, Gannett contributed
                                                               50 cents worth of Gannett stock for every $1 you
                                                               contributed (up to 6% of your pay)

                                                                *It takes 3 years of employment
                                                                 with Gannett to be fully vested.




    Social Security -                                      There are no changes to the legally required Social Security
    No Change
                                          g    e           contributions.


                                       an
                          ch
                       No

Gannett Freezing Pension Plan - Key Messages                                                         Page 3 of 11
                    Special Additional Contributions
                              Into 401(k)
         Gannett will pay special additional contributions for two groups of employees: those employees closer
         to retirement and for employees especially disadvantaged by the freeze.


         Employees Closer to Retirement

               For those employees who are:                    For those employees who are:
                • 45 years old or older                         • 50 years old or older
                    AND                               OR            AND
                • at least 15 years of service                  • at least 10 years of service
                                                                                                             re
                                                                                                           mo ear
                                                                                                       2% ch y ears
                                                                                                        ea 7 y
                                                                                                         for
                                                               Gannett will make a special additional
                                                               contribution:
                                                               • 2% of your pay each year for 7 years
                                401(k)                         • Does not require any matching funds
                                                                   from you
                                                               • Happens automatically - whether you
                                                                   contribute or not
                                                               • If you are getting this special additional
                                                                   contribution it will say so in your
                                                                   Personalized Benefits Statement
                                                               • Contributions for 2008 happen in early
                                                                   2009 - same for subsequent years until
                                                                   you leave Gannett or retire



                                                                Additional Contribution


                                                            Gannett will make an additional contribution for
                                                            certain groups of employees more disadvantaged
                                                            by the freeze.

                                                            This disadvantage arises from particular
                                                            combinations of: years of service, their specific
                                                            benefit formulas before the freeze, and other
                                                            factors.

                                                            Your Personalized Benefits Statement shows
                                                            whether you are eligible for this additional
                                                            contribution, and if you are eligible, the percent
                                                            added.

                                                            This contribution happens automatically —
                                                            whether you contribute to your 401(k) or not.




Gannett Freezing Pension Plan - Key Messages                                                     Page 4 of 11
                                               Improved 401(k)
                                                               Improved Match

                                                                                    Old 401(k)              New 401(k)
                                                      Match                         Gannett contributes     Gannett contributes
While this old 401(k) match is the most
                                                                                    50 cents worth          $1 worth of Gannett
common match, some business units do                                                of Gannett stock        stock for each $1 you
have other matching amounts.                                                        for each $1 you         contribute (up to 5%
                                                                                    contribute (up to 6%    of your salary)
                                                                                    of your salary).

                                                      Maximum                       50% of 6% = 3%          100% of 5% = 5%
    Example
      Assuming you earn $50,000 and contribute 5% of your salary ($2,500) into your 401(k).

                                                        Old 401(k)                    New 401(k)
                   Gannett’s Match in            $1,250                         $2,500
                   Gannett Stock
                   Total contribution for        $3,750                         $5,000
                   that year                     ($2,500 + $1,250)              ($2,500 + $2,500)




                                                                                                     Match is in Gannett Stock
                        Gannett’s match is:
                        • In Gannett stock
                        • There is no requirement to hold this Gannett stock
                        • You can move the Gannett stock to another
                           investment whenever you wish



                           This Change Puts More Responsibility Onto Employees

                              This change means your 401(k) will become a significantly more
                              important part of your retirement benefit.

                              It’s important to understand: this change significantly shifts
                              responsibility from the company onto employees.

                              If you contribute nothing, and almost 30% of Gannett employees do
                              contribute nothing, there will be nothing in your 401(k) when you retire.

                              Further, your benefit will increase or decrease depending on how your
                              investments perform.

                              Most investment experts agree that your money should be diversified
                              (spread across a broad range of investments). The improved match
                              means more Gannett stock in most 401(k)s. You need to be sure you
                              are comfortable with the amount of diversification in your 401(k).

                              Gannett’s improved 401(k) match is in the top 25% of companies
                              offering 401(k) plans.* But this means nothing if you don’t contribute.

                               * Hewitt: “Survey Findings - Trends and Experience in 401(k) Plans,” 2007.


Gannett Freezing Pension Plan - Key Messages                                                                    Page 5 of 11
                             Freeze’s Estimated Effects
                         Employees With 10 or More Years of Service

                  It is difficult to generalize the before and after effects of freezing the Pension Plan and
                  improving the 401(k) because:
                   • As a result of acquisitions, more than 20 different formulas came into the Gannett
                        Pension Plan
                   • Almost everyone’s situation is different based on their ages, years with Gannett,
                        amounts contributed to their 401(k), and other factors
                   • For some employees the loss could be more than shown in the pie charts below, for
                        other employees the loss could be less



                 Your Personalized Benefit Statement does not estimate the % of benefits you may lose due
                 to the freeze. The Statement does however show examples of “before freeze” and “after
                 freeze” pension benefit reductions.




Employees With 10 or More Years of Service


                                about
                                10%            For employees with 10 or more years of service and currently eligible for
                                loss           retirement (age 55 or older)....

                                                 The estimated decrease in their retirement benefit is, on average,
                                                 around 10%.
       Employees eligible                        The impact of this loss could be reduced by investing more than 5% of
       for retirement.                           your salary into your 401(k).




                                           For employees with more than 10 years of service but NOT currently
                             about         eligible for retirement...
                             20%
                             loss
                                                The estimated decrease in their retirement benefit is, on average,
                                                around 20%.
      Employees                                 The impact of this loss could be reduced by investing more than 5% of
      not eligible for                          your salary into your 401(k).
      retirement.




                   These estimated net effects assume many factors including:
                    • Pension Plan is frozen
                    • Employees invest 5% of their salary each year into the improved 401(k)
                    • Special Additional Contributions are made into the 401(k) if these apply
                    • 401(k) investment returns of 7%


Gannett Freezing Pension Plan - Key Messages                                                              Page 6 of 11
                                    Freeze’s Estimated Effects
       Employees With Less Than 10 Years of Service and Executives


       Employees With Less Than 10 Years of Service

         Employees with less than 10 years service could have larger
         losses than shown in the pie charts on the previous page.

         This happens because:
         • On average, employees with less than 10 years of service
             tend to be younger
         • Since younger employees have more years until
             retirement, they have earned less of their benefit
         • Therefore, they are losing more future benefits than older,
             longer service, employees

         On the other hand, these employees with less than 10 years
         service usually have more time before their retirement to
         accumulate a larger benefit in the improved 401(k) — an
         opportunity not available to most longer serving employees.

         It is especially important for these younger employees to
         contribute to the improved 401(k).




                                                                       Executives

                                            Gannett’s Supplemental Retirement Plan (SERP)
                                            Approximately 200 executives participate in the SERP. About 80 of
                                            these executives have their plan frozen in the same way as other
                                            employees:
                                             • Current benefits frozen
       What is the SERP?                     • No growth based on years of service and final salary
                                             • Cost-of-living allowance applied to the frozen benefit
The SERP is a way for higher
paid employees to earn pension
benefits on compensation over               Executives Under the SERP but “Grandfathered”
the Federally-mandated limit.
                                            During the 1998 Pension Changes
The government limits how
much money can be contributed
into a “qualified” pension plan.
                                             When Gannett changed its pension in 1998 some executives
                                             retained parts of their pre-change benefits. These executives
The SERP, a “non-qualified plan,”            were “grandfathered” from the 1998 changes. About 120 of these
allows the same pension benefit              executives still work in the company.
to be applied to compensation
over that limit.
                                             The SERP benefit for these executives will continue to grow based
                                             on years of service and final salary, but:
                                             • The rate of their future benefit accruals will be reduced by 1/3rd
                                             • These executives are not eligible for the improved 401(k)
                                             • These executives are not eligible for “Special Additional
                                                 Contributions”




  Gannett Freezing Pension Plan - Key Messages                                                           Page 7 of 11
                   Personalized Benefits Statements
                      Around the middle of June, personalized benefits statements will be mailed to each
                      employee’s home. These personalized benefits statements look like this.




If you have questions
about your Personalized
Benefits Statement,
please call the Gannett
Retirement Helpline at
866-357-3093 or your
local Human Resources
Representative.                                                                   Four important numbers are on the
                                                                                  2nd page.
Helpline begins June 12,
2008.




     Your frozen benefit
     • With estimated
        cost-of-living                                                                     How much money is in
        allowance applied                                                                  your Pension Plan as of
     • Until age 65                                                                        July 31, 2008.

                                                                                           This is the benefit that is
                                                                                           frozen.




                                                                              3
                                                                        $45,67




                                                                                           What % of your salary you
                                                                                           contribute into your 401(k)
                                                                                           as of May 1, 2008

        How much money is in your
        401(k) as of March 31, 2008




Gannett Freezing Pension Plan - Key Messages                                                      Page 8 of 11
     Why Gannett is Freezing the Pension Plan

    Savings                          In 2009, Gannett will save approximately $90 million by freezing the pension
                                     plan. Roughly 2/3rds of this ($60 million) will be used to improve the 401(k), with
                                     the final 1/3rd ($30 million) staying with the company.

                                                          $90 million       2009 Savings from Freezing the Pension Plan

                                                        —$60 million        2009 Additional Expense from Improving 401(k)

                                                          $30 million       Net Savings from Freeze
                                                                            Estimated for 2009

                                     The amounts above are forecasts based on normal assumptions about investment
                                     performance.

                                     Freezing the pension plan also creates a one-time, non-cash, accounting gain of
                                     approximately $48 million.




    Trend                            The trend is for companies to move away from pension plans like Gannett’s.

                                     In 1989 almost 90% of Fortune 100 companies offered a traditional defined
                                     benefit pension plan to new employees. Today less than 33% do.*

                                     * Geisel, Jerry: “Fortune 100 Employers Exiting Traditional, Hybrid Pension Plans,” Business Insurance,
                                       May 8, 2006.




    Attracting &                     Many employees place a greater value on the 401(k) — compared with the
                                     pension plan — when evaluating retirement benefits.
    Retaining
    Employees                        Increasingly employees don’t expect to work a long time at any particular
                                     employer. So they don’t expect much money to accumulate in their pension
                                     plans.

                                     An employee who worked at say eight different companies over his/her lifetime
                                     could have eight small retirement plan benefits, one at each company, waiting for
                                     his or her retirement.

                                     401(k) accounts, on the other hand, are easily rolled over from employer to
                                     employer. So the employee has one large 401(k) benefit.

                                     Many employees are also attracted to the idea of managing their own
                                     investments. This is a key feature in a 401(k).

                                     Improving the 401(k) makes it easier to attract and retain employees who value a
                                     401(k) over a company pension plan.




Gannett Freezing Pension Plan - Key Messages                                                                            Page 9 of 11
                                      Pension Plan Security


            Protected by Law

               Although the Pension Plan is frozen, it is still
               protected by all the relevant pension laws.
               A “frozen” pension plan is still a pension plan.




                                               Pension Plan Funding

                                                Our Pension Plan is sufficiently funded,
                                                assuming normal investment returns, to pay
                                                the employee benefits it promises.




                                       Pension Plan is Insured by PBGC

                                          The PBGC, Pension Benefit Guaranty
                                          Corporation, is a federal government
                                          corporation.

                                          The PBGC:
                                          • Monitors pension plans making sure they
                                             meet federal funding requirements
                                          • Insures a portion of the benefits
                                          • If a company is unable to pay promised
                                             benefits, the PBGC takes control of the
                                             plan




Gannett Freezing Pension Plan - Key Messages                                                 Page 10 of 11
                                               Legal Disclaimers




                            The company reserves the right to amend or terminate the Pension
                            Plan and/or 401(k) plan at any time. This includes reducing or
                            eliminating company contributions to the 401(k) plan in the future.

                            In the event there is any discrepancy between this communication
                            and the official plan documents, the official plan documents shall
                            control.

                            The Gannett Pension Plan and the 401(k) Plan, and the changes
                            outlined in this material, may or may not be applicable to employees
                            represented by a labor organization. Coverage depends on the
                            agreement of the labor organization or the applicable collective
                            bargaining agreement.




Gannett Freezing Pension Plan - Key Messages                                                       Page 11 of 11

								
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