PBGC Will Pay Pensions at Johnston Industries
FOR IMMEDIATE RELEASE
April 08, 2004
The Pension Benefit Guaranty Corporation today announced it has assumed responsibility for the pensions of 2,500 workers and retirees of the bankrupt Johnston Industries Inc., a maker of household and industrial fabrics based in Columbus, Ga.
"The PBGC is stepping in because Johnston Industries has missed $2 million in required contributions and its two pension plans are likely to be abandoned by the company as it liquidates," said Acting Executive Director Vince Snowbarger. "The PBGC will take over payment of retirees' monthly benefit checks without interruption, up to guaranteed federal limits, and will ensure other employees receive benefits when they are eligible to retire."
Johnston Industries filed for bankruptcy protection on January 31, 2003 and sold its productive assets in December 2003. None of the asset purchasers has agreed to assume the underfunded pension plans.
The Johnston Industries Inc. Hourly Employees Pension Plan and Johnston Industries Inc. Salaried Employees Pension Plan are 40 percent funded, with $23 million in assets to cover $58 million in benefit promises. The PBGC estimates it will be liable for about $34 million of the $35 million shortfall. The plans ended as of August 31, 2003, and the PBGC became trustee on March 25, 2004.
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.
Within several weeks, the PBGC will send trusteeship notification letters to all participants in the Johnston Industries plans. 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 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. 04-35