PBGC Protects Tom's Foods Inc. Pension Plan
FOR IMMEDIATE RELEASE
July 16, 2007
WASHINGTON- The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering nearly 3,000 employees and retirees of bankrupt snack food manufacturer Tom's Foods of Columbus, Ga.
The PBGC stepped in because Tom's Foods missed nearly $4.5 million in required pension contributions and the pension plan will be abandoned as a result of the sale of substantially all of the company's assets. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they reach retirement age.
According to PBGC estimates, the Tom's Foods Pension Plan is about 51 percent funded, with about $44 million in assets to cover some $87 million in benefit liabilities. The PBGC expects to be responsible for substantially all of the $43 million shortfall. The agency will take over the assets and use PBGC insurance funds to pay guaranteed benefits earned under the plan, which terminated on Oct. 21, 2005. The PBGC became trustee of the plan on June 28, 2007. Assumption of the plan's unfunded liabilities will have no material effect on the PBGC's financial statements, according to generally accepted accounting principles.
Tom's Foods filed for Chapter 11 protection on April 6, 2005, in the U.S. Bankruptcy Court in Columbus. On Oct. 17, 2005, Tom's Foods was purchased by Charlotte-based Lance Inc. for $40.2 million plus the assumption of certain liabilities. The transaction did not include the pension plan.
Within the next several weeks, the PBGC will send notification letters to all plan participants. 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.
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 Tom's Foods 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.
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. 07-33