PBGC Moves to Protect Pensions at the Alaska Forest Association
FOR IMMEDIATE RELEASE
March 24, 2008
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 2,330 workers and retirees of the Alaska Forest Association pension plan, a multiple-employer defined benefit plan covering members of Alaska's logging industry.
The PBGC stepped in because the pension plan would be unable to pay benefits when due. Additionally, the plan's financial condition was expected to worsen because the sponsoring companies have withdrawn from the plan and are no longer required to make ongoing funding contributions to the plan.
The Alaska Forest Association sought to end the pension plan in 2005 following a significant decline in the number of participating employers. Although the plan originally had more than 20 participating employers, only five employers remained by December 2005. Litigation regarding the plan termination was recently dismissed by agreement of the parties, and the PBGC has resolved its claims for plan underfunding against the withdrawn employers.
The Alaska Forest Association was founded in 1956 to provide companies in the forest industry with the opportunity to pool their resources in order to reduce expenses for services such as pensions and health plans.Multiple-employer plans, such as the Alaska plan, are maintained by a group of companies that come together to participate in a single pension plan.
The PBGC estimates that as of the plan termination date the Alaska Forest Association retirement plan was 47 percent funded, with assets of $40.6 million to cover about $85.5 million in benefit liabilities. The agency expects to be responsible for $43.1 million of the entire $44.9 million shortfall.
Association retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.The agency will use plan assets and PBGC insurance funds to pay guaranteed benefits earned under the plan, which ended effective June 1, 2005. The PBGC became trustee of the plan on Feb. 11, 2008. Assumption of the plan's unfunded liabilities will have no material effect on the PBGC's financial statements, according to generally accepted accounting principles.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that ended in 2005 is $45,613 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.
The PBGC has sent 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. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242.
Retirees who draw a PBGC benefit 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.
— ### —
PBGC No. 08-28