PBGC Assumes Union Stamping & Assembly Inc. Pension Plan
FOR IMMEDIATE RELEASE
September 17, 2007
WASHINGTON- The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering about 760 workers of the Union Stamping & Assembly Inc. plant in South Charleston, W. Va.
The PBGC stepped in because the company's pension plan was abandoned following the sale of substantially all of Union Stamping's assets during bankruptcy proceedings. The pension plan also lacked sufficient assets to pay benefits to all plan participants.
Union Stamping retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
According to PBGC estimates, the Union Stamping & Assembly Inc. South Charleston Plant Pension Plan for Hourly-Paid Employees is 47 percent funded, with a little more than $1.5 million in assets to cover more than $3.2 million in benefit liabilities. The agency expects to be responsible for the entire $1.7 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which terminated as of Oct. 31, 2006. The PBGC became trustee of the plan on Aug. 13, 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.
Union Stamping, based in Cleveland, Ohio, was placed into Chapter 11 protection in the U.S. Bankruptcy Court in Charleston, W. Va., by its creditors on Sept. 20, 2006. The case was converted to a voluntary Chapter 11 on Oct. 3, 2006. The company produced hoods, roofs, doors, lift gates and body panel assemblies for major domestic auto makers. On Nov. 7, 2006, the company's assets were sold to Cleveland-based Park Corp. for $18 million. The transaction did not include the pension plan.
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.
Retirees of Union Stamping 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. 07-41