The publisher of the Orange County Register has fired back at a Los Angeles Times business column on Tuesday that called the Register's plan to take out life insurance on its employees a "supremely ghoulish financial strategy." The life insurance beneficiary would be the pension plan.
Columnist Michael Hiltzik wrote that such policies are known as "company-owned life insurance" or referred to as "dead peasant insurance."
"That's a reference to Nikolai Gogol's classic comic novel "Dead Souls," which is about a con man who crisscrosses czarist Russia buying up dead serfs so he can use them as collateral for a business deal," Hiltzik wrote.
By Tuesday night, Orange County Register Publisher Aaron Kushner wrote a response to his staff in a memo, encouraging them to print Hiltzik's column and "put it somewhere as a reminder of the kind of newspaper and journalism of which we want no part."
Kushner said the practice of taking out life insurance policies to increase pension plan assets has been used by other companies larger than the Register's parent company, Freedom Communications.
"And in spite of what the L.A. Times would like you to believe, we're not czarist Russians nor gamblers and the beneficiary of the insurance is not the company," Kushner wrote.
He said the beneficiary would be the pension plan, and the employees are the sole beneficiaries of the pension plan. He also said spouses and families would benefit, too.
You can read the full memo from Aaron Kushner to OC Register staff below, which KPCC received from Mr. Kushner's spokesman.
Associates: Tonight I could not have been more proud of who we are, and more clear about who we are not.
Tonight I had the pleasure and honor (and ok, I admit, a small tear) to stand in front of a room of unsung heroes to thank them for their service to Orange County and celebrate the first year of the amazing community program we built from nothing into the Register's Everyday Heroes- bringing their stories to all of Orange County in the hope of inspiring ourselves and others to reach that little bit further. I know all of us now look forward every Monday to reading their stories, and tonight we gathered every week's Hero from the year in a gorgeous ballroom at the Montage to celebrate them in person. And if that wasn't enough (and it was quite something), to one among them we literally gave a free car for nothing... other than spending her life, pouring her heart, into helping children in need be able to enjoy and use the arts to live better lives. When I am asked why we work so hard as a team to deliver more each day than we did the day before, it is for nights like tonight and features like Everyday Heroes. Thank you for bringing the great to newspapering.
Tonight also offered a clear contrast of who we are not. You may have read the Los Angeles Times piece about our initiative to purchase life insurance policies on your behalf to strengthen your pension plan. If you haven't read it, please do. Better yet, print it out and put it somewhere where it can serve as a reminder of the kind of newspaper and journalism of which we want no part.
To a few specifics- Life insurance is not ghoulish, nor are the people who sell it, nor are those who buy it. Life insurance, by its very nature, was created to benefit the people we love and care about most. That is why it exists. And in our particular case, that is exactly why we are buying it. We care about you, your spouses and your families. You are the sole beneficiaries of the pension plan, the insurance policies and all of the significant investments we have made to strengthen your pension plan over the last 18 months. Purchasing life insurance policies as a means of increasing pension plan assets to fund your family's payments from the pension plan has been around for years, used by companies far larger than Freedom and is not novel, complicated or extraordinary.
And in spite of what the LA Times would like you to believe, we're not czarist Russians nor gamblers and the beneficiary of the insurance is not the company. The sole beneficiary is the pension plan. And that means you, in turn, as the sole beneficiaries of the pension plan, your spouses (including through spousal benefits), your families and your fellow employees. If you have any questions on how the life insurance policies benefit you as a pension participant, Human Resources is happy to answer your questions.
We work very hard, as hard as any newspaper that I am aware of, to invest in and assure that your retirement funds are strong and there for you and your family for decades to come. In just 18 months we took the fund from 60% to now over 80% funded with aggressively contributing cash ahead of any recommended guidelines. We have invested all of the cash, time and energy that we have into strengthening your pension plan because we care about you and each other- our team.
Thank you for making the beautiful things we did tonight and this past year possible, and for all that you do to make the Register and Orange County more vibrant. I hope you too had a lovely evening and look forward to many more years of building to come.
Hiltzik has posted his own response to Kushner's memo, which states that Freedom Communications, Orange County Register's parent company, never replied to his request for comment prior to his post on Tuesday.