What might happen to our pensions when the broadcast company Tribune Media is sold to NexStar?

IMPORTANT READ

Bob Rosenblatt has prepared a report for us on what might happen to our pensions when the broadcast company Tribune Media is sold to NexStar later this year. While our pensions are generally safe, he has brought up some areas of concern, particularly if our pensions are sold to an insurance company. Bob provides advice one what actions you should consider taking versus those you should not:

An update for your pension questions

Tribune Media now has control of the LA Times pensions. There is a sufficient amount of money to pay all the pensions. The federal Pension Benefit Guaranty Corp. stand behind the pensions. In the unlikely event of a failure of the pension fund, the PBGC provides a guarantee.

Here are the maximum guarantees for 2019

(See chart in attached image.)

Single life annuity means you are the only one receiving money. When you die, the checks stop. The joint and survivor annuity means that when you die, your surviving spouse gets 50% of the current check.

Currently, TransAmerica manages the pension for Tribune media. TransAmerica sends the checks to retirees receive each month.

NexStar Media has purchased Tribune Media. The deal will be completed later this year. (The Sinclair deal was called off.)

The pension assets program will be transferred to NexStar later this year.

I have called both companies and neither will discuss what might happen to the pension program.

But here are the potential choices, based on what has happened elsewhere among large corporations.

NexStar could have TransAmerica continue to run the program and distribute the monthly checks.

NexStar could hire another administrator to continue to distribute the checks.

OR NexStar could decide it wants to get out of the pension business entirely, and sell the pension obligation to a big insurance company. Some large employers, like GM have done this.

The Pension Rights Center explains this:

"What happens to my pension when it gets transferred to an insurance company?

A: If you are already getting your pension and your former employer decides to convert it to an annuity paid by an insurance company, your monthly benefit should stay the same. However, your benefits will no longer be protected by the federal pension insurance program, the Pension Benefit Guaranty Corporation. Instead, insurance annuities are covered by State Guaranty Associations which provide some protection in the event that insurance companies fail.

If you haven’t retired yet, and your pension is transferred to an insurance company, you should make sure that both your employer and the insurance company have all of the correct information that goes into calculating your benefit. This includes dates of employment, salary history, and any survivors benefit you and your spouse have chosen. You should also make sure that you have the most recent copy of your individual benefit statement. It is not unusual for an insurance company to recalculate benefits when taking over a plan, and having this information will help to prevent disputes over how much you are supposed to receive once you start receiving your annuity.”

Keep all your records.

If an insurance company buys a retirement package of pensions, it buys the obligations of pensions OWED to all people enrolled in the pension program. This includes current and future benefits, to current and future retirees. The insurer is taking over the entire pension obligation.

However, the insurance company may decide to offer a lump sum to people to choose instead of receiving their monthly check. This is a way for the insurance company to get the obligation off its books and improve its future profits. But taking the Lump Sun is usually a BAD idea for individuals unless they are critically ill and desperately need the money.

Best to stay with the monthly check. You know what you will get each month for the rest of your life. With a lump sum, you need to figure out investments and avoid the temptation of just spending the money.

These are the different scenarios for the pension future. We will not know anything more until the sale is completed and NexStar decides what it will do.

Meanwhile, keep all your records.

regards,
Bob Rosenblatt