WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced a term sheet agreement with Daimler AG on additional protections for the pension plans of Daimler's former Chrysler North America division.
Under the agreement, also signed by Chrysler and its controlling owner, Cerberus, Daimler will contribute $200 million dollars into the pension plans immediately upon final execution of the agreement. Daimler also will pay $200 million into the plans in 2010 and again in 2011.
In addition, if the Chrysler pensions terminate before August 2012 and are trusteed by the PBGC, Daimler will pay $200 million to the PBGC insurance program. The agreement replaces the $1 billion termination guarantee negotiated by the PBGC at the time of Daimler's sale of Chrysler in 2007.
Finally, the agreement closes out Daimler's 19.9% share of Chrysler, and waives repayment of Daimler's outstanding loans to Chrysler
About the PBGC:
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.