Federal Pension Insurer Protects Benefits of 5,400 Workers at Jacobson Stores
FOR IMMEDIATE RELEASE
September 26, 2002
The Pension Benefit Guaranty Corporation today announced it will assume responsibility for the pensions of about 5,400 workers and retirees of Jacobson Stores Inc., a bankrupt clothing store chain based in Jackson, Mich. Jacobson had operations in Florida, Indiana, Kansas, Kentucky, Michigan and Ohio.
"PBGC will step in to protect the pensions of Jacobson workers because the company is liquidating in bankruptcy and the plan does not have enough money to pay all benefits," said PBGC Executive Director Steven A. Kandarian. "Jacobson retirees will continue to receive their monthly pension checks without interruption, up to the maximum allowed by law. Other Jacobson workers will receive their pensions when they are eligible to retire."
The Jacobson Pension Plan will terminate as of September 30, 2002. The plan is underfunded by about $20 million, with $55 million in assets to cover almost $75 million in benefit liabilities, according to PBGC estimates. The agency will take over the plan's assets and use PBGC insurance funds to pay the guaranteed pension benefits of covered workers.
Under federal pension law, the maximum pension guaranteed for workers in plans that terminate in 2002 is $3,579.55 a month (or $42,954.60 a year) for persons retiring at age 65. Maximum guarantees are adjusted for those who retire at ages younger or older than 65 or those who elect survivor benefits.
Within the next several weeks, PBGC will send a trusteeship notification letter to all Jacobson Stores workers and retirees. After the transfer of plan records, the agency will review individual records and calculate each person's benefit according to plan provisions and federal limits. Information about the Jacobson Stores pension plan is available at the PBGC Web site. Workers and retirees with additional questions 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 for 800-400-7242. General information about PBGC's pension insurance program is available at www.pbgc.gov.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by more than 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. 02-42