PBGC Pays Pensions at Huffy Corporation
FOR IMMEDIATE RELEASE
October 05, 2005
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of 3,700 workers and retirees of Huffy Corp., a distributor of bicycles and sporting goods based in Miamisburg, Ohio.
Huffy filed for bankruptcy protection in October 2004 and announced its intention to seek termination of its underfunded pension plan in June 2005. The bankruptcy court has ruled that Huffy satisfies the legal test for terminating the plans, and the PBGC has determined that the company meets all criteria under federal law to transfer its pension liabilities to the pension insurance program.
The Huffy Corp. Retirement Plan ended as of August 31, 2005, and the PBGC became trustee of the plan on October 4, 2005. The plan is 47 percent funded, with $71.7 million in assets to cover $152.4 million in benefit promises. The PBGC estimates that it will be responsible for $80 million of the $80.7 million shortfall.
The PBGC files claims in bankruptcy against sponsors of underfunded pension plans for the full amount of the shortfall. In the Huffy bankruptcy, the PBGC expects to recover between $7 and $9 million on its claim.
Workers covered by the Huffy Corp. Retirement Plan will receive their pension benefits up to the limits set by law. Retirees will continue to receive monthly benefit checks without interruption, and other workers will receive their pensions when eligible to retire. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2005 is $45,614 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 Huffy pension plan. Workers and retirees with questions may consult the PBGC Web site,www.pbgc.govor 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.
Huffy 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 athttp://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.
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. 06-01