PBGC Negotiates Deal to Strengthen Pension Funding at Hanesbrands Inc.
FOR IMMEDIATE RELEASE
September 24, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced that it has reached a $13.8 million agreement with apparel maker Hanesbrands Inc. of Winston-Salem, N.C. to strengthen funding of its retirement plan.
Unlike situations where the PBGC assumes responsibility for pension plans that can no longer pay benefits, the Hanesbrands Inc. Pension Plan, which covers more than 30,000 workers and retirees, remains ongoing and under the company's sponsorship. Hanesbrands has agreed to put 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.
Under the agreement, Hanesbrands has put $7 million into the pension plan in September and will make an additional $6.8 million payment by Sept. 15, 2010. The payments are in addition to any required contributions to the plan.
"The nation's workers and retirees have worked hard to earn the benefits they were promised and we will use all the statutory tools at our disposal to protect those retirement benefits," said PBGC Acting Director Vince Snowbarger. "We will continue to monitor corporate activities that may weaken pension plan funding and negotiate appropriate protections. We applaud Hanesbrands 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 the Feb. 8, 2009 closure of the company's Eden Textiles facility in Eden, N.C., which affected 290 of the active participants in the National Textiles LLC Pension Plan. The National Textiles plan has since been merged into the Hanesbrands plan.
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 Sep. 8, 2009, the agency had negotiated 18 settlements involving cessation of operations. These agreements added a total of about $400 million to pension plans covering about 50,000 workers and retirees.
Hanesbrands markets apparel under the Hanes, Champion, C9 by Champion, Playtex, and Duofold brand names, among others.
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. 09-59