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News & Policy

PBGC to Protect Pensions at Lumbermens Mutual

October 21, 2004

WASHINGTON-The Pension Benefit Guaranty Corporation today announced it will assume responsibility for the pensions of more than 12,000 employees and retirees of Lumbermens Mutual Casualty Co., a property-casualty insurer based in Long Grove, Ill. Lumbermens Mutual Casualty, parent of the Kemper Insurance Corp., is under the long-term administrative supervision of the Illinois Department of Insurance.

"The PBGC is stepping in to protect the Lumbermens pensions because the company will be unable to pay benefits when due," said Executive Director Bradley D. Belt. "Retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when eligible to retire."

The pension plan for Lumbermens employees, called the Kemper Retirement Plan, is 48 percent funded, with about $515 million in assets to cover $1.055 billion in liabilities. The PBGC expects to be liable for about $529 million of the $540 million shortfall. The pension plan ended as of October 21, 2004.

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.

After the PBGC becomes trustee of the pension plan of Lumbermens Mutual, expected within several weeks, the agency will send trusteeship notification letters to all plan participants. 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. 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 investment returns.

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PBGC No. 05-05