PBGC Protects Pensions at Oxford Automotive
FOR IMMEDIATE RELEASE
February 25, 2005
WASHINGTON-The Pension Benefit Guaranty Corporation today announced it is moving to assume responsibility for the pensions of 2,800 employees of Lobdell Emery Corp. and Howell Industries, bankrupt subsidiaries of Oxford Automotive Inc., of Troy, Mich. The company manufactured auto parts at facilities in Michigan, Indiana, and Ohio.
The PBGC has determined that seven defined benefit plans sponsored by Lobdell Emery Corp. and three plans sponsored by Howell Industries ended as of Feb. 25, 2005. According to PBGC estimates, the plans are 58 percent funded, with $48 million in total assets to cover $83 million in benefit promises.
Oxford Automotive filed for Chapter 11 bankruptcy protection on Dec. 7, 2004. A confirmation hearing on the company's proposed plan of reorganization is scheduled in federal bankruptcy court for March 8, 2005. Under the plan of reorganization, Oxford Automotive's U.S. assets are to be sold, and its foreign subsidiaries will not assume the underfunded pension plans. By acting to terminate the pension plans before the plan of reorganization is confirmed, the PBGC improves its ability to recover assets for the pension plans before those funds are distributed to other creditors.
The PBGC will ensure that Oxford Automotive workers and retirees covered by the pension plans receive their benefits up to the limits set by law. Retirees will continue to receive monthly benefit checks without interruption, and other workers will receive benefits when they become eligible.
Until the PBGC becomes trustee of the pension plans, the plans remain ongoing under company sponsorship. The agency will send notification letters to all plan participants when it becomes trustee. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2005 is $45,613 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.
Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov 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.
Oxford Automotive 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.
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PBGC No. 05-27