The Guild has contracted with the financial consulting firm headed by Richard Schroeder to advise members considering the buyout offer. Richard is a former Guild president who manages the local’s investments. His firm’s expertise includes retirement planning and, in addition to helping members evaluate the buyout offer, Richard and his staff can provide general advice on retirement planning. The Guild strongly advises anyone seriously contemplating the buyout offer to use these services.
He or one of his associates will meet with you and — if you’d like, your spouse — to answer questions, crunch numbers and otherwise explore your options. There is no expense to Guild members for this service.
To set up an appointment, call his office at 634-6113. Ask for Richard, or, if he is not available, Rosanne Braxton or Steve Elwell. Their offices are located in Amherst at 1412 Sweet Home Rd. The driveway to the office is off Rensch Road, one block north of Maple Road and directly across from the west entrance to the University at Buffalo’s Amherst campus.
Richard asks that members bring as much of the following information as possible to your meeting:
- Your buyout offer, including, if possible, a pension calculation from the News.
- A recent pay stub.
- Most-recent income tax return (2008, or, if completed, 2009).
- Most-recent annual Social Security statement.
- Information, including cost, of your News health insurance coverage, and, if applicable, the spouse’s health insurance.
- Most recent Buffalo News 401K statement.
- Retirement, investment, annuity, and savings account statements.
- Recent statements on all debts, including mortgage, credit card, loans.
Frequently Asked Questions
Who is eligible to take the buyout?
All full-time employees in Circulation, Accounting, Customer Service and Classified Advertising are eligible. Eligibility in the newsroom is limited to full-timers with at last five years of seniority. Part-timers are not eligible in any Guild-represented department.
Can anyone who is eligible take a buyout?
No. The News has capped the number of employees in each department that it will accept for the buyout. It will take nine district managers, eight in the newsroom, three in Classified Advertising, two in Accounting and one in Inside Circulation.
What if more employees want to take a buyout than The News intends to accept?
The company will take those employees with the most seniority. It is possible the company will increase the number of buyouts it accepts, but there are no assurances.
How can I find out where I stand on the seniority list?
The Guild is posting seniority lists on its bulletin boards in each department.
Do I have my choice of the pension and cash buyout offers?
No, only the pension-related offer is on the table through April 26 and employees must be off the payroll by April 30. If The News doesn’t get enough employees to accept that offer, it will offer a cash buyout equal to 1.5 times annual base salary (no overtime) through May 10, with a minimum payment of $50,000.
Can I change my mind after I sign the buyout paperwork?
No, but signing does not guarantee acceptance by The News because if more employees in your department sign up than management wants to accept, it can reject those with less seniority.
How do I decide which pension option to take?
The pension plan offers five benefit options:
- A single lifetime benefit. This lasts for the life of the pensioner only and is the highest benefit amount available.
- A five-year guaranteed pension. The pensioner gets a benefit for as long as he/she lives, but if death occurs within the first five years, survivors get benefits for up to five years after the pensioner retires.
- A 10-year guaranteed pension. Similar to the previous option, extending for 10 years.
- A 50 percent survivor’s option. The pensioner gets his/her full single lifetime benefit. If the pensioner dies first, the surviving spouse gets a 50 percent benefit.
- A 100 percent survivor’s option. Same as the previous option, with a 100 percent benefit paid to a surviving spouse.
As noted, option 1 offers the largest dollar amount. The other four options offer smaller benefit amounts to compensate for the guaranteed survivor’s benefits. If you do not have dependents or a spouse, the decision is easy – take the single life pension. In most other cases where a spouse is present, you should consider the 50 percent or 100 percent survivor’s option.
Buying life insurance is another option to cover a spouse, but coverage is harder to get as you age and costs a lot to maintain into extended old age, which is when you need the survivor’s option the most. If insurance is being considered, it should be purchased and in place before accepting the retirement offer. The worst case would be to take the single lifetime benefit in anticipation of getting insurance and then to find out you have been turned down or that the insurance will cost more than expected. In most cases the five- and 10-year options are not attractive, unless you do not have a spouse, are in ill-health with a short life expectancy, and want to benefit children or other heirs after your death.
How do I calculate my pension benefit?
Rick Walker in The News’ Human Resources department will run a calculation for you, but he doesn’t want to run multiple options. Richard’s firm can also calculate a figure, using multiple options.
If you’d like to do some “back of the envelope” calculations on your own, the formula to determine your pension is the number of years of service (up to 30) x 1.55% (or .0155) x your average base salary for the five highest consecutive years of your employment. Keep in mind, these calculations are only estimates and that an employee should obtain a figure from The News before making a decision.
There’s a penalty for taking the pension before age 65, equal to about a 4.5% reduction in the pension for each year before 65.
Here’s an example: A 61-year-old reporter with 28 years of service and an average base salary of $60,000. The formula is 28 x .0155 x 60,000 = $26,040. In this case, the early-retirement penalty would be about 18% for leaving four years early, leaving the individual with an annual pension of $21,352 or $26,040 x .82. Again, these are only calculations that should be confirmed The News.
What are the details of the pension buyout being offered by The News?
Add any combination adding up to 10 years to an individual’s age or years of service, thereby lifting the current 30-year cap on years of service used in the formula to figure a pension.
It’s important to note that employees who already have reached the 30-year cap will be given credit for their extra years worked. Thus, a 35-year veteran can add the 10 years to his year of service and have his or her pension calculated at 45 years.
It’s also important to note that the $40,000 cap on annual pension payments remains in effect.
In the example used in the previous question, one could add 4 years to reach age 65 and add 6 years to obtain 34 years of service.
That same 61-year-old reporter’s new pension, under the buyout deal, would be 34 x .0155 x 60,000 = $31,620. Again, this is an estimate that would have to be confirmed by The News. There would be no penalty for leaving early because of the additional years added to the individual’s age. In this illustration, the reporter would leave The News with a pension of $31,620 a year with the buyout offer versus $21,352 without the buyout offer.
However, in such comparisons, it’s important to consider that you might not have planned to leave The News at this moment. Therefore, you should estimate your pension for the time in the future you might normally have retired and compare that amount to what you will receive under the buyout offer.
When considering a buyout offer, it’s also advisable to examine your lost wages and the cost of health care insurance between these different dates.
What about my 401K?
It is portable, but you can keep your 401K plan at the News and continue to manage it if you’d like.
Can I come back and work part-time?
If nine district managers accept the buyout, The News will give them the option of returning as permanent part-time DMs. They must accept a part-time job offer when it is offered, which the company expects to be shortly after April 26. The company said DMs can expect about 12 hours of work a week at $18.54 an hour, and they can use their seniority to be first in line to bid on extra hours that may become available.
Different rules apply in the newsroom. The News has the right to call retirees as needed. There is no guarantee of hours, however. If fewer than nine DMs accept a buyout, these rules would apply to them, as well.
If newsroom employees are interested in working part-time upon retirement, you should approach Editor Margaret Sullivan before making a decision on accepting the buyout. The company has said she will let prospective retirees know before they make a decision as to whether she is willing to bring them back part-time.
In any event, retirees may not work more than 1,000 hours during a calendar year and they will be paid the top minimum scale for the group in which they are performing work. They would not be eligible for health insurance.
There are no part-time opportunities for employees in other Guild-represented departments.
What about health insurance?
The buyout does not provide for any continuing health care insurance at employer expense. However, under federal and state COBRA laws, employees who leave the paper can continue to buy health insurance, at their expense, through The News for 36 months.
Under current law, the federal government picks up 65 percent of health insurance premiums for 18 months for employees who lose their job. The News buyout is structured to make departing employees eligible for this program. The legislation expires March 31, however, and employees must be off the payroll by then. Only employees high enough on the seniority list to be assured a buyout can take advantage of this window. Employees need to explore this option thoroughly before making a decision.
Congress is considering an extension of this program, but there are no assurances it will be passed, or what modifications might accompany it. Therefore, employees considering the buyout that would take effect after March 31 should not count on this subsidy in making a decision.
How does all this tie into Medicare?
Anyone leaving The News who is 65 and older is eligible for Medicare, the federal government health insurance program. Certain people under 65 are also eligible, such as those with disabilities or end-stage kidney disease.
However, there are gaps in traditional Medicare insurance, and many people buy a Medigap policy from a private insurer to pay for services that traditional Medicare does not cover. The prices of the supplemental plans vary greatly, depending on the level of coverage and your age. There also is an HMO-type of Medicare that many people choose. Known as Medicare Advantage plans, these can’t have supplemental Medigap policies added to them.
Everyone who qualifies for Medicare benefits is also eligible for Medicare Part D, which is the part of Medicare that covers prescription drugs. This part of Medicare is provided by private insurance companies. To compare the cost and coverage of Medicare and Medigap plans, look online at www.Medicare.gov.
Can I collect unemployment insurance if I take the pension buyout?
The Guild has obtained differing opinions on whether retirees drawing a pension can collect unemployment insurance, which tops out at $430 a week for up to 26 weeks. One way to avoid the uncertainty is to delay taking a pension until unemployment insurance has run its course, provided you remain in good standing with the state Department of Labor.
What impact does working part-time have on unemployment insurance?
If you qualify, earnings for the first two days of work each week are deducted dollar-for-dollar from unemployment payments. A claimant who works three or more days a week is ineligible for unemployment insurance for that given week.
What happens to my unused floats and vacation days if I take the buyout?
Floats must be used before retirement. Employees will be paid cash for unused vacation time they have accrued.