If you are a long-time employee or former employee of either Belo Corporation or A.H. Belo Corporation, your defined benefit pension plan is now managed by the operation – either TV or newspaper – you actually worked for. The pension plan split announced in October has now taken place.
A.H. Belo, the newspaper company, was spun off from Belo Corp., the TV group owner, in February 2008. The G. B. Dealey Retirement Pension Plan, while closed to new entrants since 2000, had remained in place until it was split effective New Year’s Day.
Benefit liabilities and assets allocable to the approximately 5,100 current and former employee participants of A.H. Belo and its newspaper businesses were transferred in accordance with government regulations to two new defined benefit pension plans created, sponsored and managed by or on behalf of A.H. Belo, and the new A.H. Belo plans are now solely responsible for paying those benefits. A final assessment and reconciliation of the assets and liabilities transferred will be completed by the end of the second quarter of 2011 based on final January 1, 2011 data, the companies said.
The benefit liabilities and assets allocable to current and former employee participants of Belo Corp. and its television businesses continue to be held by the existing Pension Plan sponsored and managed by or on behalf of Belo Corp. The split of the Plan does not change the amount of the benefits any participant has accrued or is currently receiving, the companies noted.
For plan years starting on and after January 1, 2011, Belo Corp. and A.H. Belo are each solely responsible for making contributions to their respective plans. Belo Corp.’s pension contributions for full year 2011 are currently expected to be around $16 million.
Completion of the pension split should be a positive for Belo Corp.’s balance sheet. Under settlement accounting, the company said the pension split is expected to result in a significant reduction to Belo Corp.’s net unfunded pension liability, with an associated reduction in pension-related deferred tax assets and a significant increase in the company’s total shareholders’ equity. In addition, Belo Corp.’s future annual pension expense is expected to be significantly less than if the Plan were not split.
Belo Corp. currently expects to report a non-cash loss associated with the split of the Pension Plan in the first quarter of 2011 in the range of $19-23 million with an associated tax benefit in the range of $5-7 million.
RBR-TVBR observation: Some of our younger readers may wonder what a defined benefit pension plan is. Chances are it’s the type of plan your grandparents are receiving monthly checks from. But you’ll never see one. Nearly all employers who have pension plans today have 401(k) plans that make the employee responsible for making sure they’ll be able to afford to retire.