PBGC Assumes Pension Plan of Republic Storage Systems
FOR IMMEDIATE RELEASE
October 23, 2006
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of nearly 900 former employees of Republic Storage Systems Co. Inc., an employee-owned manufacturer of school storage lockers in Canton, Ohio.
The PBGC stepped in because the two pension plans sponsored by the company faced abandonment after the company, under chapter 11 bankruptcy protection since March 14, 2006, sold substantially all of its assets to Chrysalis Capital, which did not assume sponsorship of the plans. Retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
Together, the Republic Storage Systems Co. Inc. Pension Plan for Non-bargaining Employees and the Republic Storage Systems Co. Inc. Pension Plan for Bargaining Unit Employees are 47 percent funded, with $25 million in assets to cover more than $54 million in promised benefits, according to PBGC estimates. The agency will use its insurance funds to cover all but about $6 million of the nearly $29 million shortfall. Assumption of the plans will have no material effect on the PBGC's balance sheet because, following generally accepted accounting principles, an estimate of the liability was included in its fiscal 2005 financial statements. The pension plans ended as of May 11, 2006, and PBGC became trustee on October 19, 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.
Republic Storage Systems Co. 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 at 1-800-877-8339 and ask to be connected to 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. 07-03