PBGC Assumes Lenox Group Inc. Pension Plans
FOR IMMEDIATE RELEASE
May 19, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for two pension plans covering about 4,300 workers and retirees of Lenox Group Inc., a bankrupt maker of tableware, giftware and collectibles based in Eden Prairie, Minn.
The PBGC stepped in because the underfunded pensions would be abandoned following the sale of substantially all company assets, as contemplated in Lenox's bankruptcy proceeding. The transaction does not include the pension plans. 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.
According to PBGC estimates, the Lenox China Pension Plan and the Lenox Inc. Retirement Plan are 35 percent funded, with combined assets of $70 million and benefit liabilities of $200 million. The agency expects to cover $128 million of the $130 million total shortfall. Both plans were frozen on Jan. 1, 2007.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which ended as of March 31, 2009.
Within the next several weeks, the PBGC will send notification letters to all participants in the two Lenox pension plans. 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 these pension plans are subject to the limits in effect on November 23, 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.
Lenox retirees 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 plans' unfunded liabilities will increase the PBGC's claims by $128 million and was not previously included in the agency's fiscal year 2008 financial statements.
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. 09-29