Phila. papers' union, owner reach accord

July 3, 2008 6:04:54 PM PDT
The largest union of The Philadelphia Inquirer and Philadelphia Daily News on Thursday reached an accord with management that would effectively end a lawsuit over the merger of two employee pension plans. The Newspaper Guild of Greater Philadelphia 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. The two papers' North Broad Street pension also will merge into the plan.

The merger lets the papers' owner, Philadelphia Media Holdings, avoid having to put in $8 million to shore up the $7 million North Broad plan.

Under new federal pension fund rules, a plan must be fully funded before it can pay out lump-sum severance payments to retirees or terminated employees. The North Broad plan, which was set up for this purpose, was 39 percent funded on Jan. 1, 2007, court documents show.

Merging the North Broad plan into the other fully funded plans satisfies the new rules. The deal is expected to be completed on July 30.

With the merger, "we will have achieved our objectives," said Henry Holcomb, president of the union. "The issues that provoked the lawsuit would have been addressed."

He said retirement money from the larger pension won't be used for severance payments.

Philadelphia Media Holdings did not immediately return a call for comment.

The merged fund will be called the United Independent Union-Newspaper Guild of Greater Philadelphia Pension Plan.

In April, the union sued the company for merging the Guild and North Broad pension plans without its consent. It was concerned that the severely underfunded North Broad plan would endanger the health of the larger pension.

The owner argued that it had the right to merge the pensions. The Guild had until the end of 2007 to find a multi-employer plan with which to merge. Failing that, the company said, it had the right to take over the plan - and directed a merger with the North Broad fund.

The company also said the North Broad plan, with nearly 900 members, benefits mostly the same participants in the 2,344-member Guild plan.

District Court Judge Berle M. Schiller granted a temporary restraining order, which was extended several times with July 31 as the latest deadline.