PBGC Assumes Hurd Windows & Doors Inc. Pension Plans
FOR IMMEDIATE RELEASE
August 05, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 830 workers and retirees of Hurd Windows & Doors Inc., a manufacturer of custom wood windows and doors based in Medford, Wis.
The PBGC stepped in because Hurd's underfunded pension plans failed to meet minimum funding requirements under the Internal Revenue Code and faced imminent abandonment following the company's liquidation in bankruptcy proceedings.
On Sept. 15, 2008, Hurd and its affiliates filed for Chapter 11 protection in the U.S. Bankruptcy Court in Eau Claire, Wis. The court approved the sale of substantially all of the company's assets to HWD Acquisition Inc, a wholly separate entity. The transaction did not include the pension plans.
The plans are: the Hurd Millwork Company Pension Plan for Local 2979 and the Hurd Millwork Company Pension Plan for Shop Employees. Collectively, the plans are 77 percent funded, with $9.6 million in assets to cover $12.6 million in benefit liabilities. The agency expects to be responsible for the entire $3 million shortfall. Both plans were frozen on Dec. 3, 2004.
Hurd retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
The agency will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended as of Dec, 31, 2008. The PBGC became trustee of the plan on July 20, 2009.
Within the next several weeks, the PBGC will send notification letters to all plan participants. 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 Hurd Millwork pension plans are subject to the limits in effect on Sept. 15, 2008, which set a maximum guaranteed amount of $51,750 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 Hurd 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.
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PBGC No. 09-50