The Markets February 24, 2012

BofA to Freeze Pension Fund

Bank of America will freeze its pension plans for eligible employees, effective July 1, 2012.
Reported by

According to news reports, employees will keep the pension benefits they have earned to date; however, workers will no longer accumulate new benefits into the fund. 

The company is moving to a 401(k) retirement plan for most of its employees. The company currently matches contributions of eligible workers up to 5% in the 401(k) plan; however, starting on July 1, the company will start contributing funds into workers’ 401(k) plans, regardless of whether they contribute to the plan. The company will contribute 2% to 3% of a worker’s salary into the 401(k) plan. 

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Compliance February 24, 2012

Tribune Workers Have Retirement Savings Restored

The Tribune Co., GreatBanc Trust Co. and various insurance carriers completed funding a global settlement of $32 million for the Tribune Employee Stock Ownership Plan’s participants. 
Reported by

According to the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the settlement resolves the department’s claims of violations of the Employee Retirement Income Security Act. (ERISA).

On January 30, 2012, the U.S. District Court for the Northern District of Illinois approved the global settlement agreement, which had received prior approval in October 2011 by the U.S. Bankruptcy Court for the District of Delaware.

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EBSA initiated an investigation of the plan to review its 2007 purchase of Tribune Co. stock for $250 million and the roles played by the plan’s fiduciaries, the company and the plan’s trustee, GreatBanc Trust Co. The department claimed that the company failed to act prudently and in participants’ best interests when it engaged in the ESOP transaction. Additionally, the department claimed that the ESOP transaction was prohibited, a claim consistent with the findings of the district court in the private plaintiffs’ action. (see “Judge Approves Class in Tribune ESOP Suit”).

As part of its 2007 corporate restructuring, the Tribune Co. became a privately held entity owned by the plan. In September 2008, a class-action lawsuit was filed on behalf of the plan’s participants. While initially filed in California, the case was moved to the Northern District of Illinois in November 2008. In December 2008, the Tribune Co. and some of its subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The department filed claims in the company’s bankruptcy proceedings and objected to confirmation of plans to reorganize it. These matters were resolved as part of the global settlement agreement. 

As of December 31, 2010, the Tribune ESOP had 13,020 participants. The settlement amount has been deposited into an independently managed settlement account. 

“This settlement ensures that the Tribune Employee Stock Ownership Plan’s participants and beneficiaries will be able to receive the benefits that are rightfully theirs,” said Secretary of Labor Hilda L. Solis. 

 

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