PBGC Will Pay Pensions to Fansteel Workers in Ky., Miss.
FOR IMMEDIATE RELEASE
February 10, 2004
The Pension Benefit Guaranty Corporation today announced it has assumed responsibility for the underfunded pension plan formerly sponsored by the bankrupt Fansteel Inc. for employees of its facilities in Lexington, Ky., and Gulfport, Miss. The pension plan covers about 1,200 workers and retirees.
"The PBGC is acting because Fansteel meets the necessary legal criteria to transfer its pension obligations to the federal pension insurance program," said Executive Director Steven A. Kandarian. "The PBGC will ensure that retirees continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits, and that other employees receive benefits when they are eligible to retire."
Fansteel is transferring the pension plan to the PBGC under the "distress termination" provisions of federal pension law, which allow companies to shed their pension obligations if they can prove such a step is necessary to emerge from bankruptcy. In the case of Fansteel, the PBGC has determined that the company and its subsidiaries could not afford to maintain the pension plan. Two other defined-benefit pension plans sponsored by Fansteel will remain ongoing.
The Fansteel Consolidated Employees' Pension Plan ended as of December 15, 2003, with the PBGC assuming responsibility as of February 5, 2004. The plan has about $25 million in assets and $46 million in liabilities. Of the $21 million shortfall, the agency expects to be liable for about $19 million.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2003 is $43,977 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
The PBGC will send trusteeship notification letters to all participants in the plan after it receives complete pension plan records. The agency will then review individual records and calculate each person's benefit according to plan provisions, asset allocation rules, and federal guarantee limits. Workers and retirees with questions may contact PBGC 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.
The 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 44 million American workers and retirees participating in over 31,000 private-sector defined benefit pension plans.
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PBGC No. 04-28