PBGC Assumes Pension Plan of Plymouth Rubber Co.
FOR IMMEDIATE RELEASE
July 19, 2006
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 700 workers and retirees of Plymouth Rubber Co., Canton, Mass., a maker of tapes and adhesives used mainly in the automotive and aerospace industries.
Plymouth Rubber filed for bankruptcy protection on July 5, 2005, and on January 27, 2006, announced its intention to terminate its underfunded pension plan. The bankruptcy court has ruled that Plymouth Rubber satisfies the legal test for terminating the plan, 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 Plymouth Rubber Co. Defined Benefit Pension Plan and Trust is 22 percent funded, with $3.4 million in assets to cover $15.3 million in promised benefits, according to PBGC estimates. The PBGC expects to cover the entire $11.9 million shortfall. Assumption of the plan will have no material effect on the PBGC's balance sheet, as a reserve for such liability was included in its fiscal 2005 financial statements in accordance with generally accepted accounting principles. The pension plan terminated as of April 1, 2006, and PBGC became trustee on July 18, 2006.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminated in 2006 is $47,659 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.
Plymouth Rubber Co. 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. 06-59