Skip to main content

News & Policy

PBGC Protects Pensions at Westpoint Stevens

August 19, 2005

WASHINGTON - The Pension Benefit Guaranty Corporation today announced it has assumed responsibility for the pensions of 32,500 workers and retirees of Westpoint Stevens Corp., a bankrupt textile manufacturer based in West Point, Ga.

The pension plans of Westpoint Stevens's hourly and salaried workers ended as of August 8, 2005, and the PBGC became trustee of the plans on August 18, 2005. The plans are 46 percent funded, with $260 million in total assets to cover $566 million in benefit promises. The PBGC will be liable for $286 million of the $306 million pension shortfall.

Westpoint Stevens filed for Chapter 11 bankruptcy protection on June 1, 2003, and its operating assets were sold to a group led by financier Carl Icahn in a sale that closed on August 8, 2005. Under the terms of the sale, the asset purchaser will not assume the underfunded pension plans.

The PBGC will ensure that WestpointStevens 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.

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.

Within the next several weeks, the PBGC will send trusteeship notification letters to all Westpoint Stevens pension 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.

WestpointStevens retirees who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at

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. 05-56