PBGC Protects Pensions of Consumers Distributing Inc.
FOR IMMEDIATE RELEASE
September 19, 2008
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pension plan that covers more than 950 former employees of Consumers Distributing Inc., in New York, NY.
The PBGC stepped in because the pension plan would be unable to pay benefits when due, failed to meet minimum funding standards, and faced abandonment as a result of liquidation.
Consumers Distributing was a retail sales company that liquidated during bankruptcy proceedings in the U.S. Bankruptcy Court in Trenton, N.J., shifting responsibility for the pension plan to Consumers Distributing Pension Administration Ltd., a Canadian firm with offices in New York City.
The two companies are units of Akai Holdings Limited, liquidating under the High Court of Hong Kong Administrative Region. The windup is nearly complete.
Consumers Distributing 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 Consumers Distributing Pension Administration Retirement Plan is 15 percent funded, with assets of a little over $1 million to cover $7.3 million in benefit liabilities. The PBGC expects to be responsible for $5.2 million of the $6.3 million shortfall.
The agency will use plan assets and PBGC insurance funds to pay guaranteed benefits earned under the plan, which ended on Dec. 31, 2007. The PBGC became trustee of the plan on Sept. 2, 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 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, 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 Consumers Distributing 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. 08-48