PBGC Assumes Pension Plans at Precision Custom Components LLC
FOR IMMEDIATE RELEASE
June 30, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 960 workers and retirees of Precision Custom Components LLC, a metal fabricator in York, Pa.
Under federal pension law, companies able to demonstrate that continuing plan sponsorship will lead to a cessation of operations may seek approval from the PBGC to end the plan. Precision could not sustain its pension plans and remain in business, thus meeting the legal requirements for plan termination. Additionally, Precision has not paid into its plans since 2001, resulting in more than $20 million in unpaid contributions.
Precision filed a distress application with the PBGC on Oct. 30, 2007, to end its two retirement plans: the Precision Custom Components Salaried Employees' Retirement & Pension Plan, and the Precision Custom Components Hourly Employees' Retirement & Pension Plan.
Precision retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
Together, the plans are 48 percent funded, with assets of about $30 million to cover $62 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the entire $32 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on Dec. 31, 2007. The agency became trustee of the plan on June 9, 2009.
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 terminated in 2007 is $49,500 per year for those who retire at age 65. 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.
Precision Custom Components is a manufacturer of custom fabricated pressure vessels, reactors, casks, and heavy walled components requiring highly specialized machining, welding, and fabrication. The company also makes highly engineered steel products for the Navy's nuclear power program. In recent years the company has struggled with a weak manufacturing environment.
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.
Precision 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 plan's unfunded liabilities will have no significant effect on the PBGC's financial statements because an estimate of the claim was previously included in the agency's fiscal year 2008 financial statements, in accordance with generally accepted accounting principles.
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.
— ### —
PBGC No. 09-43