PBGC Protects Fairchild Corp. Pensions
FOR IMMEDIATE RELEASE
December 17, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for two underfunded pension plans covering about 6,600 employees and retirees of The Fairchild Corp., headquartered in McLean, Va., and the parent company of subsidiaries in the aerospace, motorcycle accessory and real estate sectors.
The pension insurer's action comes as Fairchild, in chapter 11 bankruptcy since March 18, 2009, expects to have its plan of liquidation confirmed by the court at a hearing scheduled for December 17. The plan of liquidation does not provide for continuation of the pension plans. By taking this action prior to the confirmation hearing, the PBGC matures a claim for the entire pension shortfall against Fairchild and its domestic and foreign subsidiaries.
The Fairchild Corp. Master Retirement Plan and the Retirement Plan for Employees of Marson Corp. and Marson Fastener Corp. and Their Domestic Subsidiaries are 55 percent funded, with $67 million in combined assets to cover $121 million in total benefit liabilities, according to PBGC estimates. The agency expects to be liable for about $53 million of the $54 million shortfall. The Fairchild plan was frozen as of June 1, 2009. The Marson plan has been frozen since February 9, 1998.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which end on December 17, 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 plans, they will continue to be sponsored and administered by Fairchild. 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.
Fairchild and Marson 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 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.
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.
— ### —
PBGC No. 10-09