Federal Pension Insurer Assumes Responsibility for Pillowtex Pensions
FOR IMMEDIATE RELEASE
October 30, 2003
The Pension Benefit Guaranty Corporation today announced that it will assume responsibility for the pensions of nearly 23,000 workers and retirees of Pillowtex Corp., Kannapolis, N.C., a manufacturer of household textiles that is liquidating in bankruptcy.
"The PBGC is stepping in to ensure that Pillowtex workers receive the benefits they have earned, " said PBGC Executive Director Steven A. Kandarian. "Retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits. Other employees will receive benefits when they are eligible to retire."
The Pillowtex Corp. Retirement Plan for Hourly Employees and Pillowtex Corp. Retirement Plan for Salaried Employees will end as of October 31, 2003. The two plans have assets of about $271 million and liabilities of $460 million. Of the $189 million shortfall, the federal pension insurance program will be liable for roughly $176 million.
On July 30, 2003, Pillowtex Corp. filed for bankruptcy protection and announced it would cease operations. The company has since closed its facilities, dismissed its work force of almost 7,800 employees, and sold its property and brand names in liquidation.
Under federal pension law, the maximum pension guaranteed for workers in plans that end in 2003 is $3,664 a month (or $43,977 a year) for persons retiring at age 65. Maximum guarantees are reduced for those who retire before age 65 or choose survivor benefits, and increased for those who retire after age 65. Benefit increases made within the last five years are not fully guaranteed.
Workers and retirees do not need to take any action. Individuals who have questions or wish to retire may call the PBGC toll-free at 1-800-400-7242. Information about Pillowtex pensions and the PBGC's pension insurance program is available at the agency Web site, www.pbgc.gov.
Although the PBGC does not insure health insurance benefits, Pillowtex retirees who receive benefits from the agency may be eligible for a health care tax credit under the Trade Adjustment Act of 2002. Further information may be found on the PBGC Web site at http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits for about 44 million American workers and retirees participating in over 32,500 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. 04-06