Seattle Times Still Mired in Pension Woes

When the McClatchy Co. wrote down its 49.5 percent stake in the Seattle Times Co. to zero at the end of 2008, the Sacramento-based media company blamed the Times Co.’s pension fund liability, which soared after the fund was clobbered by the stock market crash last year. The Times‘ pension plan was under water by some 23 percent, or nearly $40 million at the end of 2008, according to officials of the Pacific Northwest Newspaper Guild.

There are at least 2,641 union and non-union Times employees in the Seattle Times pension plan according to Guild officials. That includes 907 active employees, both union and non-union, plus 1,103 participants who no longer work at the Times but remain in the plan and have benefits coming to them. In addition, there are 633 retirees and others who already collect benefits from the plan.

In an update posted on the Guild’s blog, the union reported today that the pension plan’s funding continued to sink this year. “When it comes to pensions, the big story is rampant underfunding as a result of loss in the value of pension assets,” said Elizabeth Browne, the Guild’s administrative officer. Brown estimated the plan, which had been overfunded by the Times Co. two years ago, is now down by 30 percent.

The Times is in a particularly uncomfortable position on its pension plans since it merged the underfunded pensions of employees at its Blethen Maine subsidiary into its corporate pension scheme in 2007. When the Blethen Maine unit was sold to an investment group earlier this year, the buyers refused to take back those pensions, leaving the Times with an additional hidden liability: responsibility for the pensions of hundreds of Maine employees no longer connected to the company.

The federal Pension Protection Act of 2006 regulates how pension funds are administered. The Act requires companies like the Times to restrict some types of pension payouts, such as lump-sum payouts, if the plan’s funding falls below 80 percent. If it drops below 60 percent, federal restrictions get even tighter. And depending on the level of funding in the plan, the federal law says the Times could have to make up some of the underfunding within seven years, which would add to the Times Co.’s already stressed finances.

According to Brown, a review of the Times Co.’s finances is currently underway by Teamster economist Doug Henderson. A final 2009 accounting won’t be available until next year, she said.

This post has been updated.