PBGC Protects Pensions at Sencorp
FOR IMMEDIATE RELEASE
July 01, 2009
WASHINGTON - The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for the underfunded pension plan covering more than 2,590 workers and retirees of Sencorp, a manufacturer of battery powered staplers, nailers, and screw systems, in Cincinnati, Ohio.
The agency's move comes as Sencorp prepares to sell all of its assets to Wynnchurch Capital Ltd. for $41 million in cash. The court is expected to approve the transaction during a July 2 hearing that will result in the abandonment of the pension plan. By taking this action before the sale, the PBGC will mature its claim for the entire pension shortfall against the company and its subsidiaries.
The Sencorp Retirement Plan is 62 percent funded, with about $79 million in assets to cover $126 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the entire $47 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on July 1, 2009. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
Until the PBGC becomes trustee, the pension plan will remain ongoing under company sponsorship. The agency will send notification letters to all plan participants when it becomes trustee. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2009 is $54,000 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.
The economic downtown negatively affected Sencorp's sales. The company's profitability also fell due to the severe decline in residential and commercial construction. Sencorp's efforts to recapitalize failed, spurring a Chapter 11 filing in the U.S. Bankruptcy Court in Cincinnati on May 8, 2009. The company plans to close its sale to Wynnchurch sometime after the sale hearing.
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.
Sencorp 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 increase the PBGC's claims by $47.4 million and was not previously included in the agency's fiscal year 2008 financial statements.
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. 09-44