Skip to main content

News & Policy

PBGC Protects Rockford Products Corp. Pension Plan

June 24, 2008

WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it will assume responsibility for the pensions of about 700 workers and retirees of Rockford Products Corp. in Rockford, Ill.

The PBGC stepped in because the company failed to pay more than $6 million in legally required pension funding contributions. The agency also determined that the pension plan was unable to pay benefits when due because it lacked sufficient funding and faced abandonment following the sale of substantially all of the company's assets. The buyer of Rockford's business assets did not assume the pension plan.

Rockford 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 Rockford Products Corp. Correlation Pension Plan is about 32 percent funded, with $11 million in assets to cover some $34 million in benefit liabilities. The agency expects to be responsible for the entire $23 million shortfall.

The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended as of Dec. 17, 2007. The PBGC became trustee of the plan on June 3, 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.

Rockford, founded in 1929, made non-wire steel springs and sold bolts, nuts and screws. On July 25, 2007, the company sought Chapter 11 protection in the U.S. Bankruptcy Court in Rockford because of weakening sales in the automotive sector. In December 2007, following a court approved asset sale, the company ceased all operations, terminated its employees and entered Chapter 7 liquidation.

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.

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, 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 Rockford Products 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

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. 08-37