PBGC Assumes Pensions of Mid-States Express Inc.
FOR IMMEDIATE RELEASE
January 08, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for three underfunded pension plans covering more than 675 workers and retirees of Mid-States Express, Inc., a defunct trucking carrier based in Aurora, Ill.
The PBGC stepped in because the plans failed to meet minimum funding requirements and faced abandonment because the company, in bankruptcy since March 27, 2009, has ceased operations and is liquidating its assets under the direction of a chapter 7 bankruptcy trustee. Retirees in the three pension plans will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
The three pension plans are 78 percent funded, with aggregate assets of $13.9 million to cover $17.9 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the about $3.4 million of the plans' $4 million shortfall. The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans. The PBGC assumed trusteeship of the plans on December 22, 2009.
The Mid-States Express Employees' Pension Pension Plan and Trust ended as of December 31, 2008. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2008 is $51,750 per year. The Valley Cartage Inc. Employees' Pension Plan and Trust, and the National Transport Express Inc. Employees' Pension Plan and Trust ended as of March 27, 2009. The federal maximum guaranteed pension for 65-year-olds in plans that ended 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.
Within the next several weeks, the PBGC will send notification letters to all participants in the three plans.
Retirees of Midstates Express Inc. 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 plans' 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.
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PBGC No. 10-16