Federal Pension Insurer Will Pay Pensions of Fleming Companies
FOR IMMEDIATE RELEASE
February 12, 2004
The Pension Benefit Guaranty Corporation today announced it has assumed responsibility for the underfunded pension plan of more than 17,600 workers and retirees of the bankrupt Fleming Companies Inc., a wholesale-grocery distributor and convenience-store operator based in Lewisville, Tex.
"The PBGC is required to step in because Fleming 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."
Fleming is handing off its largest 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 Fleming, the PBGC has determined that the company and its subsidiaries, including its Core-Mark convenience-store division, could not afford to maintain the pension plan.
The Fleming Companies Inc. Pension Plan ended as of January 1, 2004, with the PBGC assuming responsibility as of February 12, 2004. The plan has about $270 million in assets and $644 million in liabilities. Of the $374 million shortfall, the agency expects to be liable for about $358 million. Fleming and its subsidiaries also sponsor four other defined-benefit pension plans, which remain ongoing.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2004 is $44,386 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.
Within the next several weeks, the PBGC will send trusteeship notification letters to all participants in the Fleming Companies plan. After the transfer of plan documents, the agency will 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 consult the PBGC Web site or call 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.
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. 04-29