PBGC Reaches Agreement Maintaining Pension Plan of Former Global Crossing Unit
FOR IMMEDIATE RELEASE
December 20, 2002
The Pension Benefit Guaranty Corp. announced today that it has reached an agreement maintaining the pension plan formerly sponsored by Frontier Corp., a Global Crossing unit that was sold last year to Citizens Communications Co. of Middletown, N.Y.
Under the deal, Global Crossing will transfer the former Frontier pension plan to Citizens as originally agreed at the time of the sale in 2001. This arrangement supersedes Global Crossing's 2002 bankruptcy reorganization proposal to move the pension plan to a liquidating trust.
As a result, the PBGC will withdraw its Nov. 25 request to terminate the pension plan and have the agency named trustee. The agency opposed assigning the underfunded plan to the liquidating trust, arguing that the transfer could harm the plan's 5,500 workers and retirees and the pension insurance program.
"This agreement is a victory for the Frontier pension plan participants and for the pension insurance program that millions of Americans rely on," said PBGC Executive Director Steven A. Kandarian. "The PBGC will act whenever it can to derail arrangements that would dump unfunded pension liabilities on the system at the expense of our premium payers and the retirees we protect."
The Global Crossing North America Inc. Frozen Pension Plan (formerly called the Frontier Corp. Pension Plan for Non-Bargaining Unit Employees) remains underfunded by about $105 million, according to PBGC estimates, with about $473 million in assets to cover $578 million in liabilities. Approximately 95 percent of the plan's assets and liabilities will be transferred to Citizens, which will assume responsibility for funding the plan. The portion of the plan covering active Global Crossing workers will be continued by the reorganized Global Crossing.
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 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. 03-11