PBGC Moves to Assume Freedom Forge Pension Plans
FOR IMMEDIATE RELEASE
June 27, 2002
The Pension Benefit Guaranty Corporation (PBGC) today announced that it is seeking to terminate and assume responsibility for two pension plans that cover more than 3,300 employees of Freedom Forge Corp., formerly known as Standard Steel, a bankrupt producer of railway wheels and other steel products in Burnham and Latrobe, Pa. The plans are underfunded by a total of about $37 million.
"PBGC is stepping in because the company is selling its assets in bankruptcy and the purchaser will not assume the pension plans," said PBGC Executive Director Steven A. Kandarian. "Because of PBGC's guarantee, retirees will continue to receive their monthly checks, subject to federal limits on insured benefits. Other Freedom Forge workers will receive basic pension benefits when they are eligible to retire."
Freedom Forge is selling its operations in a transaction to be approved by the bankruptcy court. The two pension plans, with combined assets of about $98 million to cover benefit liabilities of about $135 million according to PBGC estimates, would face abandonment after the sale. By seeking to take over the plans now, PBGC protects the pension insurance program from sustaining greater losses.
Under federal pension law, the maximum pension guaranteed for workers in plans that terminated in 2002 is $3,579 a month (or $42,954 a year) for persons retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits. Temporary benefit supplements for early retirees and certain portions of recent benefit improvements are not covered by PBGC.
Workers and retirees do not need to take any action. Freedom Forge pension plan participants who have questions about benefits or who wish to retire may contact PBGC's Customer Service Center toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask to be connected to 800-400-7242. Information about PBGC's pension insurance program also may be found at www.pbgc.gov.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by about 44 million American workers and retirees participating in over 35,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC's investment returns.
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PBGC No. 02-28