PBGC Assumes Pension Plans of Interlake Material Handling Inc.
FOR IMMEDIATE RELEASE
July 02, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 1,280 workers and retirees of Interlake Material Handling Inc. in Naperville, Ill.
The PBGC stepped in because the company's two underfunded pension plans would be abandoned following the liquidation of substantially all of Interlake's assets during bankruptcy proceedings. Additionally, the company's plans are insufficiently funded and would be unable to pay benefits when due. On March 5, 2009, the bankruptcy court approved the sale of the company's assets to Mecalux U.S.A. Inc. and Mecalux Medico S.A. de C.V. in a transaction that did not include the pension plans. The two plans are the Interlake Material Handling Inc. Consolidated Pension Plan, and the Consolidated Pension Plan for Pontiac Hourly and Dexion Salaried Employees.
Interlake 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 49 percent funded with assets of $16.7 million to cover $34.5 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the $17.7 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on March 5, 2009.
Within the next several weeks, the PBGC will send notification letters to all participants in Interlake's retirement 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 the plan are subject to the limits in effect on Jan. 5, 2009, which set a maximum guaranteed amount of $54,000 for a 65-year-old. The agency became trustee of the plan on June 25, 2009.
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.
Interlake was a manufacturer of steel storage racks and its origins date back to the formation of the Interlake Steel Co. in 1905. In the 1950's Interlake began to shift its primary focus from steel fabrication to inventory and storage products. On Jan. 5, 2009, the company filed for Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del., to facilitate a sale of the company's assets to Mecalux.
Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov/circuitcity 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.
Interlake 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 $17.7 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. 09-45