PBGC Protects Pensions at Austin Company
FOR IMMEDIATE RELEASE
April 01, 2008
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pension plan that covers approximately 1,600 former employees of the Austin Co. in Cleveland, Ohio.
The Austin Co., an architectural consulting, design and engineering services firm filed for Chapter 11 protection in the U.S. Bankruptcy Court in Cleveland in October 2005, and later sold substantially all of its assets to AAC Designers Builders Inc. The transaction did not include the pension plan.
The PBGC stepped in because the pension plan would be unable to pay benefits when due and faced abandonment following the sale of substantially all the company's assets.
Austin Co. 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 Austin Company Retirement Plan is 96 percent funded, with assets of $128.6 million to cover $133.6 million in benefit liabilities. The agency expects to be responsible for about $2.1 million of the $5 million shortfall.
The agency will use plan assets and PBGC insurance funds to pay guaranteed benefits earned under the plan, which ended on Sept. 12, 2007. The PBGC became trustee of the plan on March 13, 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.
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 terminating in 2007 is $49,500 per year 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. 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 Austin Co. 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. 08-32