One big job for PBGC is to make sure that companies with pension plans finance those plans and PBGC's safety net. The best outcome is always for a company to keep its own pension plans. But when it can't, we also fight in court to recover the money that the company owes for its pensions.
A recent case involved the Daytona Beach, Fla. News-Journal, a newspaper in receivership – meaning that a court ordered the sale of the paper. The business owed PBGC $15 million for pension benefits that the newspaper owed its employees but that PBGC is now paying.
But in court, another creditor made a claim for an amount greater than the value of the entire business, based on its former ownership of the company. A Florida court gave that claim priority – leaving PBGC and others out in the cold.
A PBGC staff attorney researched Florida law and found that the court had made an error. With that information PBGC successfully appealed the ruling. Florida law says that claims arising from debt get priority over claims arising from ownership. The appeal kept PBGC's claim alive and may yet enable PBGC to collect significant funds from the newspaper.
"The decision supports the general rule that debt comes before equity," said Chief Counsel Izzy Goldowitz, "so it's an important precedent."
Read the appeals court's full decision. [PDF]
In and around the hard-hit city of Detroit, PBGC is protecting the retirement of people making a difference. The agency has stepped in to protect the retirement income of the nearly 1,600 employees of United Way for Southeastern Michigan.
While the pension plan is ending, the not-for-profit United Way for Southeastern Michigan is not. So, workers there can continue the non-profit's mission to improve communities and individual lives with the confidence that their pensions are safe.
The pension plan had a shortfall of about $23 million, which PBGC will make up from its insurance funds. Retirees will get their full benefit, up to the limits set by Congress ($54,000 a year for a 65-year-old).
If you're a member of the pension plan you will get a letter from us soon with more information. In the meantime, see the United Way for Southeastern Michigan plan page for more information.
PBGC protects pensions. We also want to protect you!
Scams are at an all-time high during these tough economic times, and retirees are among scammers' favorite targets.
We have just learned that an individual attempted to obtain a 25% "finder's fee" for helping a retired United Airlines flight attendant get her PBGC pension benefit. He, as well as others, may be doing this with other UAL flight attendants.
Let's be clear: You do not need anyone's assistance to obtain your benefit from PBGC. People or firms who offer to help you for a finder's fee are not associated with PBGC. If you have questions, contact us by email or call our Customer Contact Center at 1-800-400-7242.
Read the full fraud alert from the Inspector General.
PBGC has stepped in to protect the retirements of health-care workers at Lower Bucks Hospital in southeastern Pennsylvania and North Adams Regional Hospital in Massachusetts
For more than 50 years, the not-for-profit Lower Bucks Hospital, has maintained its healing mission, serving a population of more than 300,000 people. Although Lower Bucks Hospital will continue to operate, its roughly 1,600 caregivers and other staff will now receive their pension benefits from PBGC.
Fortunately, North Adams Regional Hospital also will continue its century-long tradition as a full-service community hospital for the Northern Berkshires. Because the hospital could not afford to keep its pension plan, PBGC will pay benefits to its 700 workers and retirees.
For more information, see the Lower Bucks Hospital plan page or the North Adams Regional Hospital plan page.