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Sections Home Page Local News AP News Archives Business Classifieds Event Calendar Forums Life Opinion Obituaries Photo Gallery Since We Asked Sports Tempo Weather Special Coverage 2006 Britt Festivals --> Shop Our Valley AutoFinder HomeFinder JobFinder Search Our Valley Special Sections Homelife Magazine Joy Magazine Readers Choice 2006 Oregon Golf Info Oregon Wine Info Our Valley Other Publications Local Links Ashland News eSouthernOregon Newspapers In Education Personals Moving Here Movie Listings TV Listings Volunteer Customer Service Advertise With Us Media Kit Place Classified Ad Contact Us FAQ's Home Delivery Site Map --> Email Story to a Friend August 5, 2006 Harry & David's pension plan replaced by 401(k) Subhead By Greg Stiles Mail Tribune Harry & David Operations Corp. is following the lead of hundreds of American companies by doing away with its present pension plan and replacing it with a 401(k) retirement savings program. The Medford-based company, whose Harry & David Direct Marketing catalog and Internet unit sells gourmet foods globally, informed its employees in a memo dated July 31 that pension plans will be frozen on July 1, 2007. In a filing with the Securities and Exchange Commission this week, Harry & David Operations said no employee enrolled in the defined benefit plan will accrue additional benefits after June 30, 2007. However, employees will not lose benefits earned during the next 11 months. The change affects 3,700 past and present employes nationwide. "This is not a termination of the pension plan," said Rudd Johnson, Harry & David's executive vice president of human resources. "Lots of companies are moving away from defined benefits to (employee contribution) K plans, that has been happening for a number of years. There will be no cash savings to the company this year and benefits will accrue for almost the next year." Although the company has long offered a pension plan for workers, its present form was adopted on June 17, 2004, after New York investment firm Wasserstein & Co. acquired the company from Japan's Yamanouchi Pharmaceutical. Advertisement Under the pension plan, an employee with a year of service could join the following Jan. 1 or July 1, Johnson said. Harry & David's 401(k) plan matches every dollar contributed to the 401(k) plan up to 3 percent of pay and half of the next 2 percent that an employee contributes, up to IRS ceilings. Johnson said the changes will provide the company with more predictable and manageable retirement costs while preserving participating employees retirement benefits earned before the freeze. However, future growth of employee retirement funds will largely depend on their investing prowess. The fundamental difference between a pension and a 401(k) plan is who is responsible for it. Pensions guarantee a certain benefit while 401(k) plans guarantee only a contribution percentage. "Clearly this firm is cutting costs and doing what they can to increase the bottom line," said Greg Koenig, a Medford financial planner familiar with Wasserstein's operations. "None of the things they're doing are out of the ordinary. Let's say you're getting $2,800 a month, that's a defined benefit. With a 401(k), you've got a defined contribution and it depends on how well you select investment choices. It amounts to the employee's money going there, instead of the employers'." Although a company may claim some of its pension contributions on its tax filings, it's not as beneficial as going away from a pension plan, Koenig said. Harry & David's memo encourages employee participation in its defined contribution plan. "The change makes participating in the company's 401(k) plan even more important than before," the letter said. By saving for retirement in the 401(k) plan, you reduce your taxable income and receive additional contributions (from the company). Harry & David told employees to expect personalized "Total Compensation Statement(s)" in the mail during September. The statements will give an estimate of pension plan benefits earned to date for those who retired at 65. Separately, Johnson confirmed Harry & David changed its qualifications for gaining health care benefits, adding that benefits went unchanged when its coverage plan was renewed July 1. Employees must now work 1,600 hours within a rolling 52-week period to gain those benefits. Thus, employees averaging fewer than 31 hours a week during that period would lose benefits. Last August, Harry & David filed preliminary documents leading to an initial public offering. However, the company didn't follow through, saying the timing wasn't right. The pension move and others could make an IPO more attractive. "In the past, Wasserstein has bought private companies and taken them public within two years," Koenig said. "Obviously, it's taken longer than some people would've guessed. They want to wait until profits are better than current to enhance the price they'd get in an IPO. If they were to take 500 people off the health-care rolls, particularly where there are families involved, the savings would be pretty significant." Reach reporter Greg Stiles at 776-4463 or at [email protected] Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2006 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback online casinos news Home Security Systems California Casinos Men's Clothing Southern Oregon Loans --> GMAT Prep Fundraisers Send Flowers Entertainment Guide --> Casinos Canada Trunks, Footlocker Online Casino Reviews Advertisements Advertisement