The largest union of the jointly owned Philadelphia Inquirer and Philadelphia Daily News reached an accord Thursday with management to end a lawsuit over the merger of two pension plans.
The Newspaper Guild of Greater Philadelphia had objected to the merger when it involved bringing the guild's pension plan under control of the a smaller fund the company used to cover severance payments.
Under the settlement, the guild 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.
That new combined plan _ to be controlled by a board with representatives from the union, the independent plan and the papers' owner, Philadelphia Media Holdings _ will then absorb the company-controlled North Broad Street plan.
The settlement satisfies the union because it doesn't give the company control over the guild plan; the union was worried the company would take $8 million from the guild plan to bring the $7 million North Broad plan into compliance with federal rules.
The agreement allows the company to satisfy the rules without adding the $8 million to the North Broad plan because the plan is now part of a much bigger plan that is fully funded, according to the union, which told employees about the settlement in a memo Thursday.
Under new federal pension fund rules, a plan cannot make lump-sum payments to retirees or terminated employees unless it is fully funded. The North Broad plan, which was set up specifically to make severance payments, was only 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.
"We will have achieved our objectives," said Henry Holcomb, president of the union. "The issues that provoked the lawsuit would have been addressed."
Retirement money from the larger pension plan won't be used for severance payments from the smaller fund, he said.
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 most of the 900 participants in the North Broad plan also belong to 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.