PBGC Protects Pensions at PTC Alliance Corp.
FOR IMMEDIATE RELEASE
December 28, 2009
WASHINGTON - The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for the underfunded pension plan covering about 750 employees and retirees of PTC Alliance Corp., Wexford, Pa., a bankrupt maker of specialty steel tubing and bars with facilities in seven states, primarily Pennsylvania, Ohio and Illinois.
The pension insurer's action comes as PTC Alliance, in chapter 11 bankruptcy since October 1, 2009, prepares to sell substantially all of its assets at a hearing tentatively set for January 4, 2010. The company will seek bankruptcy court approval of the transaction that currently will not include the pension plan.
If the PBGC delayed action until after the sale, the plan would face abandonment and there would be no assets to pay the agency's claims for unfunded pension liabilities. By taking this action prior to the sale, the PBGC matures a claim for the entire pension shortfall against domestic and foreign assets of PTC Alliance. Any purchaser of PTC Alliance assets will have to make provision for the pension plan before it can take clear title to these assets.
The PTC Alliance Corp. Pension Plan is 51 percent funded, with $39.7 million in assets to cover $77.1 million in benefit liabilities, according to PBGC estimates. The agency expects to be liable for $37.0 million of the $37.4 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ends on December 28, 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.
The PBGC will not have specific information about PTC Alliance pension benefits until the agency becomes trustee of the plan. 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.
PTC Alliance 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 as 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.
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PBGC No. 10-11