PBGC Pays Pensions at Penn Traffic
FOR IMMEDIATE RELEASE
February 24, 2005
WASHINGTON-The Pension Benefit Guaranty Corporation today announced it has assumed responsibility for the pensions of 9,400 non-union workers of Penn Traffic Co. of Syracuse, N.Y., which operated more than 200 retail supermarkets under the trade names Riverside Markets, Bi-Low Foods, Quality Markets, P&C Foods, and Big Bear.
Penn Traffic filed for Chapter 11 bankruptcy protection on May 30, 2003, and applied to terminate its pension plans on November 21, 2003. After extensive review of the company's ability to afford the pension plans, the PBGC determined that Penn Traffic met the legal criteria to transfer the liabilities of its largest pension plan to the federal pension insurance program. The reorganized Penn Traffic Co. will continue to sponsor and fund four other defined benefit plans.
The Penn Traffic Co. Cash Balance Plan ended as of January 21, 2004, and the PBGC became trustee on Feb. 23, 2005. According to PBGC estimates, the plan is 40 percent funded, with $84 million in assets to cover $210 million in benefit promises. The PBGC will be liable for $125 million of the $126 million shortfall.
The PBGC will ensure that workers covered by the Penn Traffic Co. Cash Balance plan receive their benefits up to the limits set by law. Retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pension when eligible to retire. 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 Penn Traffic pension plan. 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.
Penn Traffic retirees who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit.
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.
— ### —
PBGC No. 05-25