PBGC Assumes Pension Plan of Jernberg Industries Inc.
FOR IMMEDIATE RELEASE
May 05, 2006
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 600 former employees of bankrupt Jernberg Industries Inc., a Chicago-based maker of forged and machined components for the automotive industry.
The PBGC stepped in because the pension plan faced abandonment after Jernberg sold substantially all of its assets and no purchaser was willing to assume the plan. Retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
The Jernberg Industries Inc. Pension Plan is 47 percent funded, with $10.3 million in assets to cover nearly $22 million in promised benefits, according to PBGC estimates. The agency expects to be liable for $10.2 million of the $11.7 million shortfall. Assumption of the plan will have no material effect on the PBGC's balance sheet, as an estimate of the liability was included in its fiscal 2005 financial statements according to generally accepted accounting principles. The pension plan terminated as of September 7, 2005, and PBGC became trustee on May 1, 2006.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminated 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.
Jernberg Industries Inc. 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 http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.
Within the next several weeks, the PBGC will send trusteeship notification letters to all plan participants. Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov or call toll-free at 1-800-400-7242. TTY/TDD users should call the federal relay service by dialing 711 and asking for 800-400-7242.
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 30,000 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. 06-47