PBGC Protects Pension Plan at LandAmerica Financial Group
FOR IMMEDIATE RELEASE
May 11, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it is taking responsibility for the underfunded pension plan covering some 9,600 employees and retirees of LandAmerica Financial Group Inc. of Glen Allen, Va., a bankrupt real estate services firm.
The PBGC's move to assume the pension plan comes ahead of a May 14 bankruptcy court hearing on the sale of stock in LandAmerica subsidiaries. By the agency's action to end the pension plan before the sale, the company's subsidiaries remain liable for the plan's unfunded benefit liabilities. Under the Employee Retirement Income Security Act of 1974 (ERISA), the federal legislation that created the PBGC, the agency is empowered to collect claims from members of a plan sponsor's controlled group, such as the subsidiaries of LandAmerica that may be sold this week. Such entities are directly or indirectly 80-percent owned by their parent company.
The LandAmerica Cash Balance Plan is 85 percent funded, with assets of $210 million and benefit liabilities of $246 million, according to PBGC estimates. The agency expects to cover the entire $36 million shortfall. The plan was frozen as of March 16, 2005.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ends on May 11, 2009. 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.
Within the next several weeks, the PBGC will send notification letters to all participants in the LandAmerica plan. Under provisions of the Pension Protection Act of 2006, the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore participants in this pension plan are subject to the limits in effect on November 26, 2008, which set a maximum guaranteed amount of $51,750 for a 65-year-old.
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 LandAmerica Financial Group Inc. 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.
Assumption of the plan's unfunded liabilities will increase PBGC's claims by $31 million and was not previously included in the agency's fiscal year 2008 financial statements.
The PBGC is a federal corporation created under ERISA. 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. 09-24