PBGC Negotiates Deal to Strengthen Pension Funding at Cooper Tire & Rubber
FOR IMMEDIATE RELEASE
August 12, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced an agreement with Cooper Tire & Rubber Co. of Findlay, Ohio, that will strengthen funding of its Spectrum Retirement Plan by $62 million, including a $39 million contribution to the plan and waiver of an existing $23 million carryover balance.
Unlike situations where the PBGC assumes responsibility for pension plans that can no longer pay benefits, the Spectrum plan remains ongoing under Cooper's sponsorship, covering about 7,000 workers and retirees, including some 1,300 employed at the Albany, Ga., plant scheduled to close later this year. Under the agreement, Cooper is putting more money into the plan for the benefit of participants and to reduce risk to the PBGC insurance program by enhancing the plan's financial health.
"The PBGC keeps a constant watch for corporate actions that can put pensions and the pension insurance program at greater risk," said PBGC Acting Director Vince Snowbarger. "But in this instance, when Cooper Tire planned to close their Albany facility, they approached us to negotiate suitable pension funding protections like those announced today. We appreciate Cooper's readiness to work with us to achieve a favorable outcome for their employees and retirees. The PBGC encourages other companies to contact us in advance of plant closing decisions to ensure timely agreement on funding arrangements."
By ceasing operations at Albany, Cooper could have faced an obligation to provide protection against $62 million in potential liabilities. This spurred the PBGC to seek additional funding and other consideration for the plan. The agency negotiated the agreement under provisions of the Employee Retirement Income Security Act of 1974 (ERISA) that permit the agency to seek pension protections when a plant closing causes more than 20 percent of covered workers to lose their jobs.
The PBGC is a federal corporation created under 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.
— ### —
PBGC No. 09-53