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PBGC Protects Powermate Corporation Pension Plan

October 21, 2009

WASHINGTON-The Pension Benefit Guaranty Corp. (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering 600 former workers and retirees of Powermate Corporation, a manufacturer of portable generators, air compressors and pressure washers based in Aurora, Ill.

The PBGC stepped in because the Powermate Consolidated Pension Plan faced
abandonment because the company is liquidating all of its assets under bankruptcy proceedings, and there would be no entity left to finance or administer the plan.

Powermate retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.

The Powermate Consolidated Pension Plan is 76 percent funded with assets of $6.9 million to cover $9.1 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the entire $2.2 million shortfall.

The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on June 1, 2008. Powermate's plan was frozen on Jan. 31, 2004.

Within the next several weeks, the PBGC will send notification letters to all participants in the Powermate pension plan. Under provisions of the Pension Protection Act of 2006, the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore, participants in the plan are subject to the limits in effect on March 17, 2008, which set a maximum guaranteed amount of $51,750 a year for a 65-year-old. The agency became trustee of the plan on Oct. 13, 2009.

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.

Powermate began as Coleman Powermate Inc. in 1965. The name was changed to Powermate Corporation in 2004. The decline in business was spurred by poor sales in the backup power industry, rising commodity prices and series of underperforming contracts. The company filed for Chapter 11 protection on March 17, 2008 in the U.S. Bankruptcy Court in Wilmington, Del.

Workers and retirees with questions may consult the PBGC Web site, 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.

Powermate retirees 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

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 2009 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. 10-01