PBGC Negotiates Pension Protection with Electrolux Home Products
FOR IMMEDIATE RELEASE
December 13, 2007
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced that it has reached a $77.5 million agreement with Swedish-owned Electrolux Home Products Inc. to protect retirement benefits of more than 2,350 former employees.
The agreement stems from a March 2006 shutdown of Electrolux's plant in Greenville, Mich., which triggered agency action to obtain financial protection for the pension plan. ERISA, the federal pension law that created the PBGC, requires the PBGC to seek such protection when more than 20% of a company's employees covered by a pension plan lose their jobs due to a plant closing.
Under the agreement, Electrolux agreed to waive an existing $42.5 million credit balance in its pension fund. The credit balance would have excused Electrolux from making further pension contributions up to that amount. The agreement also calls for Electrolux to make $35 million in additional contributions to the pension plan over the next five years.
"Once again the PBGC has been able to use the statutory tools at its disposal to protect the retirement benefits of American pensioners," said PBGC Interim Director Charles E.F. Millard. "The PBGC will continue to aggressively monitor business transactions that may jeopardize pension plans and arrange suitable protections, as we have done with Electrolux and earlier this year with Cerberus/DaimlerChrysler. We appreciate Electrolux's cooperation in working with us to devise a solution that is in the best interests of employees, retirees, and their families."
Electrolux sponsors eight pension plans. The agreement covers the Electrolux Pension Plan for Bargaining Employees at the Greenville, Mich., plant. At the time of the Greenville plant closing, the plan was 81 percent funded with unfunded benefit liabilities of $77.5 million as of March 2006.
The agreement will put more money into the plan for the benefit of the Electrolux workers, and will reduce risk to the PBGC's insurance program by enhancing the plan's financial health.
Electrolux produces consumer appliances such as refrigerators, freezers, dryers and washing machines, as well as food service equipment for hotels, restaurants and institutions.
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. 08-13