PBGC Negotiates Deal to Strengthen Pension Funding at Western Union
FOR IMMEDIATE RELEASE
August 21, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced that it has reached a $4.1 million agreement with Western Union Financial Services Inc. of Englewood, Colo., to strengthen funding of its retirement plan.
Unlike situations where the PBGC assumes responsibility for pension plans that can no longer pay benefits, the Western Union Financial Services Inc. Pension Plan, which covers more than 890 workers and retirees, remains ongoing and under the company's sponsorship. Under the agreement, Western Union 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 agreement stipulates that on or before Sept. 11, 2009, Western Union will make a $4.1 million cash payment for the 2008 plan year that will be in addition to any required payments to the pension plan.
"We will use all the statutory tools at our disposal to protect the retirement benefits of American workers and retirees," said PBGC Acting Director Vince Snowbarger. "We will continue to actively monitor corporate transactions that may weaken pension plan funding and negotiate appropriate protections. We want to thank Western Union for its cooperation in working with us to create a solution that is in the best interests of the company's employees."
The agreement stems from an Aug. 7, 2008 shutdown of the company's customer call center in Bridgeton, Mo., where 153 of the facility's 351 employees lost their jobs. The displaced workers represent a 44 percent reduction in the Bridgeton location's workforce. The Employee Retirement Income Security Act of 1974 (ERISA), the federal pension law that created the PBGC, requires the agency to seek additional protection when more than 20 percent of a company's employees covered by a pension plan lose their jobs due to a cessation of operations at a facility. However, the agency strives to craft settlements that safeguard pension plans, while recognizing the business needs of the companies that sponsor them.
As of July 31, 2009, the agency has negotiated 14 settlements involving cessation of operations. These agreements added a total of about $246 million to pension plans covering over 28,000 workers and retirees.
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.
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PBGC No. 09-55