PBGC Protects Pensions at Mother's Cake & Cookie Co.
FOR IMMEDIATE RELEASE
July 14, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering about 1,100 workers and retirees of closely-held Mother's Cake & Cookie Co., Battle Creek, Mich. The company made cookies under the Archway, Mother's, and Mrs. Allison's labels and for store brands, mostly at a plant in Ashland, Ohio.
The PBGC stepped in because the pension plan faces abandonment as the company liquidates in chapter 7 bankruptcy with no asset purchaser willing to assume the plan. 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 Metz-Mother's Cake & Cookie Co. Consolidated Pension Plan is 71 percent funded, with assets of $24 million and benefit liabilities of $34 million. The PBGC expects to cover the shortfall of approximately $10 million. The agency will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on October 6, 2008, when the company terminated all employees and filed for bankruptcy protection.
Within the next several weeks, the PBGC will send notification letters to all participants in the Metz-Mother's 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 these pension plans are subject to the limits in effect on October 6, 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 Mothers Cake & Cookie Co. 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 $9.6 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. 09-46