PBGC Moves to Protect Pensions at Proliance International Inc.
FOR IMMEDIATE RELEASE
August 12, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it will take responsibility for underfunded pension plans covering more than 1,620 workers and retirees of Proliance International Inc., an auto parts maker based in New Haven, Conn.
The agency's move comes ahead of a series of asset sales while the company operates under Chapter 11 bankruptcy protection. If the PBGC delayed action until after the sales close, no entity would remain to finance or administer the plans, and the possibility of recovering on the agency's claims for unfunded pension liabilities would be severely diminished.
On July 2, 2009, Proliance and its three U.S. subsidiaries filed for Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del. The company designs, manufactures, and markets automotive heating and cooling components and systems throughout North and Central America and Europe.
The company's underfunded plans are: the Proliance International Inc. Bargaining Unit Pension Plan and the Proliance International Inc. Pension Plan. Collectively, the plans are 54 percent funded with assets of $20 million to cover benefit liabilities of $37 million, according to PBGC estimates. The agency expects to be responsible for the entire $17 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the pension plans, which end on Aug. 12, 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 Proliance pension 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 this pension plan are subject to the limits in effect on July 2, 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 Proliance 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 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. 09-52