PBGC Moves to Protect Pensions at Hayes Lemmerz International, Inc.
FOR IMMEDIATE RELEASE
November 30, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for the underfunded pension plan covering more than 4,780 workers and retirees of Hayes Lemmerz International, Inc., a wheel manufacturer based in Northville, Mich.
The pension insurer is stepping in because Hayes Lemmerz has failed to meet the minimum funding requirements, and the company cannot afford to fund the pension plan and to successfully reorganize. If the company is unable to reorganize in bankruptcy proceedings, the pension plan would be abandoned following a sale of substantially all of the company's assets. By taking action now, the PBGC prevents further deterioration of the plan's condition.
The Hayes Lemmerz International, Inc. Retirement Income Plan is 54 percent funded, with assets of $110.4 million to cover benefit liabilities of $204.8 million, according to PBGC estimates. The agency expects to be responsible for $93.7 million of the $94.4 million shortfall. The plan was frozen on Dec. 31, 2004.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on Nov. 30, 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.
Hayes Lemmerz is considered the largest global wheel manufacturer for the automotive industry. On May 11, 2009, the company filed for Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del. The company intends to reorganize and emerge from bankruptcy this year to preserve its market share of the wheel business.
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 Hayes Lemmerz 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 2009 financial statements, in accordance with generally accepted accounting principles.
The PBGC is a federal corporation created under ERISA. It currently insures the basic pension benefits of about 44 million American workers and retirees in more than 29,000 private-sector defined benefit pension plans. The Corporation receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC's investment returns.
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PBGC No. 10-07