PBGC Protects Indy Mac Bank F.S.B. Pension Plan
FOR IMMEDIATE RELEASE
August 18, 2009
WASHINGTON-The Pension Benefit Guaranty Corp. (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering nearly 1,900 workers and retirees of IndyMac Bank F.S.B., a unit of IndyMac Bancorp Inc., Pasadena, Calif.
The PBGC stepped in because the IndyMac Bank F.S.B. Defined Benefit Pension Plan faced abandonment as the bank failed and IndyMac Bancorp liquidated in chapter 7 bankruptcy. On July 11, 2008, the U.S. Treasury Department's Office of Thrift Supervision closed the bank and placed it into Federal Deposit Insurance Corp. (FDIC) receivership. On March 19, 2009, the FDIC sold substantially all of the bank's assets to One West Bank Group LLC, in a transaction that did not include the pension plan.
Retirees and beneficiaries under the plan will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire. The PBGC estimates that the plan is 89 percent funded, with assets of $33 million and benefit liabilities of $37 million, and expects to cover $3.7 million of the $4 million shortfall. The agency will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which was frozen on May 31, 2007, and terminated on July 11, 2008, when IndyMac Bank closed and entered FDIC receivership.
Within the next several weeks, the PBGC will send notification letters to all participants in the IndyMac Bank plan. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminated in 2008 is $51,750. 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 IndyMac Bank F.S.B. 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. 09-54