PBGC Moves to Protect Pensions at Metaldyne Corp.
FOR IMMEDIATE RELEASE
July 31, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it will take responsibility for the underfunded pension plan covering about 10,770 workers and retirees of Metaldyne Corp., an auto parts supplier based in Plymouth, Mich.
The agency's move comes ahead of a series of asset sales while the company operates under Chapter 11 bankruptcy protection. None of the proposed transactions includes assumption of the pension plan. If the PBGC delayed action until after the sales close, no entity would remain to finance or administer the pension plan, and the possibility of recovering on the agency's claims for unfunded pension liabilities would be severely diminished.
On May 27, 2009, Metaldyne and 30 of its U.S. subsidiaries filed for Chapter 11 protection in the U.S. Bankruptcy Court in Manhattan. The company is a global manufacturer of highly engineered metal components for automobile makers such as Ford Motor Co., General Motors Co., and Chrysler Group LLC.
The Metaldyne Corporation Pension Plan is about 53 percent funded, with assets of $177 million to cover benefit liabilities of $334 million, according to PBGC estimates. The agency expects to be responsible for $153 million of the $157 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the pension plan, which ends on July 31, 2009. 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.
After the agency becomes trustee, notification letters will be sent to all participants in the Metaldyne pension 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 this pension plan are subject to the limits in effect on May 27, 2009, which set a maximum guaranteed amount of $54,000 a year 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 Metaldyne 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 $153 million and was not previously included in the agency's fiscal year 2008 financial statements.
The PBGC is a federal corporation created under the ERISA. 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. 09-49