PBGC Assumes East River Management Corp. Pension Plan
FOR IMMEDIATE RELEASE
March 10, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of 88 former employees of the East River Management Corp., a building service provider in New York City.
The PBGC stepped in because the East River Management Corp. Employee Retirement Plan was unable to pay benefits owed to 61 retired workers after the plan lost 100 percent of its assets following the dissolution of Bernard L. Madoff Securities. The Madoff firm is currently under federal investigation for allegedly executing a $50 billion fraudulent investment scheme.
The PBGC started paying benefits to East River participants on an emergency basis after learning of the retirement plan's problems in December. The agency estimates it will assume about $2 million in benefits liabilities as a result of the plan's termination. Assumption of the plan's unfunded liabilities will have no material effect on the PBGC's financial statement according to generally accepted accounting principles.
East River Management Corp. provided building management services in New York City. The pension plan was maintained by an inactive successor company prior to the action taken by the PBGC.
Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire. The pension plan ended as of Dec. 18, 2008, and the PBGC became trustee on March 5, 2009.
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 terminated in 2008 is $51,750 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 the East River Management Corp. 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 29,000 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. 09-16