PBGC Assumes Best Manufacturing Inc. Pension Plan
FOR IMMEDIATE RELEASE
October 05, 2007
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 650 workers and retirees of Best Manufacturing Inc., a maker of service sector uniforms based in Jersey City, N.J.
The PBGC stepped in because the company failed to pay more than $1.3 million in legally required pension funding contributions. The agency also determined that the plan would be unable to pay benefits when due and that it would be abandoned following the company's bankruptcy proceedings.
Best Manufacturing 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 Best Manufacturing Inc. Employees Retirement Plan is about 60 percent funded, with $11.8 million in assets to cover $19.8 million in benefit liabilities. The agency expects to be responsible for the entire $7.9 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 April 10, 2007. The PBGC became trustee of the plan on Sept. 19, 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.
Best Manufacturing made and distributed textiles and career apparel for the hospitality, healthcare, food service and textile rental industries. On Aug. 9, 2006, the company filed for Chapter 11 protection in the U.S. Bankruptcy Court in Newark, N.J. On Feb. 9, the court approved the sale of substantially all of the company's assets for about $35 million to Dan River Inc. of Danville, Va. The transaction did not include the pension plan. The Chapter 11 case was converted to a Chapter 7 liquidation following the asset sale.
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 2007 is $49,500 per year for those who retire at age 65. 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 Best Manufacturing 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. 08-02