PBGC Moves to Protect Pensions at Stant and Standard-Thomson
FOR IMMEDIATE RELEASE
September 15, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for the underfunded pension plans covering about 900 employees and retirees of Stant Manufacturing Inc. and its Standard-Thomson Corp. affiliate, based in Connersville, Ind., with other facilities in Pine Bluff, Ark. and Troy, Mich. Stant and its U.S. subsidiaries, makers of specialized parts for automotive heating, cooling and emission control applications, entered chapter 11 bankruptcy on July 27, 2009.
The pension insurer's action comes as Stant and its domestic subsidiaries seek approval for the sale of substantially all assets, at a hearing set for today in the U.S. Bankruptcy Court for the District of Delaware. The proposed transaction currently will not include the pension plans. After the sale, no entity would remain to finance or administer the pension plans.
By taking action prior to the asset sale, the PBGC matures a claim for the entire pension shortfall against Stant's foreign assets. If the PBGC delayed action until after the sale closes, the possibility of recovering on the agency's claims for unfunded pension liabilities would be severely diminished.
Collectively, the Stant Pension Plan (Hourly Employees), the Pension Plan for Hourly Employees of Standard-Thomson (IUE) and the Pension Plan for Hourly Employees of Standard-Thomson (IAM) are 61 percent funded, with $14.3 million in assets to cover $23.4 million in benefit liabilities, according to PBGC estimates. The agency expects to be liable for $8.9 million of the $9 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which end on September 15, 2009. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire. Until the PBGC becomes trustee of the pension plan, the plan will remain ongoing under company sponsorship. The agency will send notification letters to all plan participants when it becomes trustee.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2009 is $54,000 per year. 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 Stant Manufacturing Inc. and Standard-Thomson Corp. 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 plans' unfunded liabilities will increase the PBGC's claims by $9 million and was not previously included in the agency's fiscal year 2008 financial statements.
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 30,000 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. 09-58