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PBGC Blog: Retirement Matters

ReichholdPBGC will pay retirement benefits for more than 4,500 current and future retirees at Reichhold Inc., a manufacturer of resins used for composites, based in Durham, N.C.

The agency is stepping in because the company plans to sell its assets in bankruptcy and the pension plan will be abandoned. The Reichhold Inc. Retirement Plan will end as of Oct. 17, 2014.

PBGC will pay all pension benefits earned by the plan's retirees up to the legal limit of about $59,320 a year for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

Employees and retirees who are participants in the Reichhold plan will continue to receive benefits from the company until PBGC assumes responsibility.

According to PBGC estimates, the plan is 70 percent funded with $228 million in assets to pay $325 million in benefit liabilities. The agency is expected to cover $90 million of the $97 million shortfall.

On Sept. 30, 2014, Reichhold and three of its affiliates sought Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del. The company said in court papers that financiers Third Avenue Management, Black Diamond Capital Management, and J.P. Morgan Chase, which hold Reichhold's senior secured notes, intend to be the lead bidders for Reichhold's assets. An auction, sale hearing, and closing are slated for Dec. 19, 2014; Dec. 22, 2014; and January 30, 2015, respectively.

Hispanic Heritage Month

Each year, on September 15, we celebrate the start of National Hispanic Heritage Month. During this celebration, which runs through October 15, we recognize the significant impact Hispanic and Latino Americans have had on American history. We celebrate their rich culture and countless achievements. And this year's theme, "Hispanics: A legacy of history, a present of action and a future of success," reminds us of their profound impact on American culture. 

In his proclamation, President Obama said our Nation is strengthened when we lift up the Hispanic community. He also said when we create more ladders of opportunity, we provide hope for all Americans to reach their greatest potential.

But when looking at retirement preparedness, Hispanic Americans are often lower on the ladder than the general population.

Although many Americans face difficulty planning for retirement, Hispanic Americans face unique challenges that other minority groups do not. Hispanic Americans typically have less access to employer-provided benefits and contribute less on their own. The reason? Greater emphasis is usually placed on short-term financial security, such as eliminating debt. Saving for retirement is simply not a short-term priority.

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National Urban League.

PBGC will pay retirement benefits for 233 people covered by a plan sponsored by the Los Angeles Urban League Inc., a local chapter of the National Urban League, a non-profit civil rights organization.

In addition to the organization's work to advance equal opportunities for African American and other minority youths, the group also ran a Head Start program, which provided early education for pre-kindergarten students.

The agency is stepping in because the organization is unable to fund the plan that covers Head Start employees. The Defined Benefit Pension Plan of Los Angeles Urban League Head Start State Pre-school will end as of Aug. 31, 2014.

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This entry is part of a series of blog posts that looks back and commemorates the agency's work.

PBGC 40th Anniversary Logo

The big blows are landed

The fight to save pensions intensified, as financial crisis led to broken promises and end-runs on pension security. Iconic companies moved to end pension security and the number of people served by PBGC continued to rise.

We started the decade with annual benefit payments to participants surpassing the $1 billion mark for the first time.

As 2001 started, PBGC took over two Trans World Airlines' pension plans. These plans covered 36,500 former workers and retirees and were underfunded by about $700 million. By the end of the year annual benefit payments by PBGC to participants surpassed the $1 billion mark for the first time.

TWA was merely the first big blow of many that decade.

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This entry is part of a series of blog posts that looks back and commemorates the agency's work.

Early Program Warning cartoon. A tailor with PBGC on his shirt tells his customer 'A nip here... a tuck there.. and we'll be all set!' His customer has a suit jacket with 'Early Warning Program' written on it.

The Landscapes Shift

The intensity of our work began to widen and deepen, calling upon us to use our creative, financial and legal skills to find new ways to alleviate a sudden rash of pension jettisoning. At the same time, we significantly improved protection for people with traditional pensions, and we expanded and strengthened our customer service platform.

The decade started with a pleasant, familiar result: The U.S. Supreme Court issues an 8-1 decision in the LTV case affirming PBGC's broad authority to address abuses of the federal pension insurance system.

It helped fortify us for a decade of determined destinations that improved our service and fortitude.

For example, as 1990 ended we established the "Early Warning Program" to work with plan sponsors to reduce risk and prevent losses to plan participants and the insurance program as a consequence of corporate transactions. That program paid off in May 1994 when we negotiated a $10 billion pension contribution from General Motors — the largest single contribution ever made to a PBGC-insured pension plan.

The next year, 1995, the John F. Kennedy School of Government and Ford Foundation presented us with the Innovations in Government Award for that Early Warning Program. This award recognizes innovative government solutions in response to social or economic problems.

It was not the only new, important idea we implemented and that succeeded.

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This entry is part of a series of blog posts that looks back and commemorates the agency's work.

PBGC 40th Anniversary Logo

Setting the foundation

What a way to start a decade: Standing in front of the Supreme Court. Yet that is how we began the 1980s, seven days into the year, arguing — and winning — a major decision that upheld the constitutionality of employer liability.

We won a big decision in a battle that was part of a wider, tougher war — and a war where those seeking pensions were losing ground. It was the decade when pension plans sharply turned to become programs at risk.

The decade started with 35.9 million private-sector workers (46 percent of all private-sector workers) being covered by a pension plan. As of Sept. 30, 1980, we were responsible for about 50,000 people.

That decade saw our assets grow along with our responsibilities. We went from being responsible for about 50,000 people to more than 250,000 people. Our assets exceeded $1 billion for the first time.

And the firsts continued.

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