Comstock's magazine 1119 - November 2019 | Page 60

n FINANCE
McClatchy declined to respond to questions about the
status of its pension fund. Spokesperson Jeanne Segal re-
leased a statement noting in part that “current and former
colleagues in our pension program … have dedicated their
energy to our enterprise and we are steadfast in our intention
to honor their work. We also have an obligation to manage
prudently the company’s balance sheet for the future sus-
tainability of our company.” The waiver request, the state-
ment noted, is designed to help fulfill both goals.
HOW HEALTHY ARE PENSION PLANS?
Of the three types of pensions, the private single-employer
plans, like McClatchy’s, are in the best shape. The funded ra-
tios of S&P 1500 company plans averaged about 85 percent
in December 2018. For small single-employer plans, funding
ratios are even higher, usually at least 90 percent, says Rob-
erts. Contrary to the trends elsewhere, demand for pension
plans among small employers is booming, he says. They’ve
been more popular in the last two years than ever, especially
among high-income companies like law and physician prac-
tices, he says.
On the next rung down the solvency ladder are the state’s
public pension plans. CalPERS’ funded ratio was 70 per-
cent as of July, about where it’s been since 2011. Meanwhile,
CalSTRS’ ratio is 64 percent, and the system implemented a
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plan in 2014 that uses increased contributions from the state,
school districts and employees that it says will get it to 100
percent funding by 2046.
Worst off are multiemployer plans. One that covers some
workers in the Sacramento region illustrates why. The Auto-
motive Industries Pension Plan covers about 25,000 people,
most in Northern California — current or former employees
of companies like UPS and Waste Management and of auto
dealers, repair and machine shops, and the like. In 2000, the
plan had 450 contributing companies.
Then came the 2000 dot-com crash and 2008 recession,
sinking the plan’s investments and sending it careening to-
ward insolvency — meaning not enough money to pay prom-
ised benefits. In a coup de grace, when General Motors and
Chrysler nearly collapsed in 2008, thousands of dealerships,
including 50 in the Bay Area, that had been contributing to
the pension fund went out of business. That also led to the
shutdown of auto parts shops and other businesses in the
plan. By June 2018, only 155 employers were contributing,
and the plan was paying out $6 in pensions for every $1 it was
getting in contributions, according to a letter plan trustees
sent to Congress.
To get back on the road to solvency, in 2016 the trustees
sought federal approval of benefit cuts that averaged 38 per-
cent for most participants, from $974 monthly to $601 on av-
erage. But the U.S. Department of the Treasury rejected the