Statement of PBGC Director Charles E.F. Millard on Continuation of Defined Benefit Pensions at Solutia Inc.
FOR IMMEDIATE RELEASE
February 29, 2008
WASHINGTON- Charles E.F. Millard, director of the Pension Benefit Guaranty Corporation, issued the following statement today:
"As Solutia emerges from Chapter 11 protection today, the PBGC applauds the company's success in preserving its pension plan for the benefit of its workers and retirees. The company should be commended for keeping its commitment to its employees' retirement security, and for not seeking to shift its responsibilities to the federal pension insurance program."
As insurer of America's private defined benefit pensions, the PBGC takes an active role in corporate bankruptcy proceedings on behalf of workers whose pension plans are not fully funded.
Solutia, which manufactures and supplies specialty chemicals, sponsors a defined benefit pension plan that covers more than 20,000 participants. The plan of reorganization confirmed by the bankruptcy court provides that Solutia will continue to sponsor and maintain the pension plan.
During the bankruptcy case, Solutia continued to make pension funding contributions as required by ERISA, the federal pension law that created the PBGC. The agency actively participated in the bankruptcy proceeding, serving as a member of the official committee representing unsecured creditors.
The U.S. Bankruptcy Court in Manhattan confirmed Solutia's plan of reorganization, which explains how creditors are paid, late last year, but adverse market conditions delayed Solutia's emergence from bankruptcy. Earlier this week, the bankruptcy court approved a settlement between the company and its investors that enabled Solutia to exit bankruptcy.
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.
— ### —
PBGC No. 08-23