PBGC Assumes Pension Plans of Two Falcon Products Companies
FOR IMMEDIATE RELEASE
November 22, 2005
Falcon Products and Shelby Williams, along with seven other subsidiaries of Falcon Products, filed for bankruptcy protection in January 2005. The companies filed an application with PBGC to terminate the plans in June 2005, and sought bankruptcy court approval in September 2005. The bankruptcy court has ruled that the companies satisfy the legal test for terminating the plans, and the PBGC has determined that they meet all criteria under federal law to transfer their pension liabilities to the pension insurance program.
The Falcon Products Inc. Retirement Plan and the Shelby Williams Industries Inc. Employees Pension Plan ended as of August 31, 2005. Together the plans are 44 percent funded, with about $26 million in assets to cover nearly $59 million in promised benefits. The PBGC estimates that it will be responsible for $31.6 million of the $33 million shortfall.
A third pension plan, covering some 70 employees and retirees of another Falcon Products subsidiary, Sellers & Josephson Inc. will remain ongoing pending PBGC's appeal of the bankruptcy court's decision on plan terminations. The PBGC believes the court erred by finding that Falcon Products and the other bankrupt companies could not afford the three plans together, rather than considering each plan on a separate basis.The agency believes such an analysis would have shown that the Sellers & Josephson Inc. Employees Pension Plan could be maintained by Falcon Products.
Workers covered by the Falcon Products and Shelby Williams plans will receive their pension benefits up to the limits set by law. Retirees will continue to receive monthly benefit checks without interruption, and other wor kers 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 two terminated pension plans. 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.
Retirees of Falcon Products and Shelby Williams 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 http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.
Falcon Products' facilities outside of St. Louis include those of Shelby Williams in Morristown, Tenn. and Sellers & Josephson in Englewood and Carlstadt, N.J.
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. 06-07