Hostess aims to clarify pension fund confusion

by Eric Schroeder
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IRVING, TEXAS — Media reports this week “inaccurately suggested” that Hostess Brands, Inc. inappropriately used pension money to fund its operations prior to filing bankruptcy in January 2012, according to a statement released this afternoon by the Irving-based company.

“As Hostess has repeatedly disclosed, it suspended contributions to its multi-employer pension plans in August 2011 because it faced a severe liquidity crisis and could no longer afford to maintain its pension contributions,” Hostess said. “Over the course of several decades, various labor bargaining units for Hostess Brands’ employees negotiated the right to convert portions of their future wage increases to pension contributions. Once the bargaining units exercised these rights, such future amounts became permanent pension contributions that were separate and distinct from wages.

“At no time were these pension contributions paid as wages, so no funds were ever ‘deducted from paychecks,’ as one news outlet erroneously reported.  Hostess Brands has at all times continued to pay its union employees’ current wages in full compliance with its collective bargaining agreements.

“The pension plans may assert and have asserted claims in Hostess’ bankruptcy cases for missed pre-petition and post-petition pension contributions.”

In an interview with the Wall Street Journal, Gregory Rayburn, chief executive officer of Hostess, said it was “terrible” that employee wages earmarked for the pension were steered elsewhere by the company.

“I think it’s like a lot of things in this case,” he told the W.S.J. “It’s not a good situation to have.”

Hostess’ decision to halt pension contributions was a sticking point for many of the union workers who opted to strike.
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READER COMMENTS (9)

By Michelle Peterson 12/14/2012 6:46:42 AM
My husband worked for Hostess and the company DID continue to take the money out of the workers checks and DID NOT contribute it to the pension fund as they were supposed to. So I supposed 18,000+ employees are lying when they say this, huh?

By Steve Golemon 12/13/2012 7:37:02 PM
There was nothing inaccurate. Hostess stopped paying the EMPLYOYEES pension money to the pension fund.

By Kimb Kerr 12/13/2012 7:25:33 PM
We did still receive our wages, however, when contracts were negotiated & the pattern was layed on the table, instead of using all the money in the pattern for wage increases we chose to put most of it towards pension...............so............yes it was OUR money & they stole it & somebody needs to go to prison.......thank you

By Al 12/12/2012 9:46:05 AM
Does anybody start investigation and somebody be persecuted for this pension mess?

By Bill 12/12/2012 7:23:31 AM
I usually find Baking Business Daily to be helpful and informative, but this article leaves me more confused than informed. I'm a "watcher of Hostess" - not an employee, employer, or union member. "Inappropriate use of pension funds" is its use for anything other than the intended use of funding the pension, period. If the company redirected this money, it is "inappropriate." So, Baking Business, did they or didn't they? You lead the story with an article that "inaccurately suggested" inappropriate use, and end with Rayburn saying it was "terrible" that funds were steered elsewhere. Will a future article include "jail time" for someone?

By Dan 12/11/2012 5:04:17 PM
What part does hostess claim to be inaccurate? They admit that hostess brands employees negotiated that part of their wages be converted to pension contributions.I am not a lawyer but anyone that can read what did would say they stole our money.

By Jack 12/11/2012 4:35:10 PM
Read their statement,parts of our wages WE converted into our pensions and they were contractualy obligated to pay. WE did not just give them their money back.They were not seperate from our wages rather a part of our wages.

By Amanda 12/11/2012 4:10:39 PM
Hostess still continues to harm the ex-employees by withholding important information to the Unemployment Office so that people are being delayed in getting their benefits. I guess Rayburn has an excuse for this too. Bet he has not missed any pay.

By Tim 12/11/2012 3:55:30 PM
There is no hiding the facts that hostess continues to lie and spin the facts, over the past 21 years we as a union would negotiate wage increases. Example we might agree to a 30 cent and hour wage increase, we would then ask the company to deposit 20 cent an hour into our retirement fund and increase our hourly wage by only 10 cent an hour. Over the past 30 years this comes to equal $4.28 per hour, when Brian Driscoll, then ceo of hostess, stop the deposits of our wages into our retirement fund hostess did not return our wages to our weekly pay checks, hostess just kept our wages earned. When poor people steal it is called theft, when wall street bankers steal it is called a sound business decision.