PBGC Protects Pensions at Hartmarx Corporation
FOR IMMEDIATE RELEASE
January 11, 2010
WASHINGTON-The Pension Benefit Guaranty Corp. (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering nearly 13,000 former workers and retirees of Hartmarx Corp., a clothing manufacturer based in Chicago, Ill.
The PBGC stepped in because the plan faced abandonment after the company, in bankruptcy since Jan. 23, 2009, sold all of its assets to purchasers who did not assume responsibility for financing or administering the plan.
Hartmarx 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 Hartmarx Retirement Income Plan is 47 percent funded, with assets of $142.8 million to cover $306.6 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for $158.5 million of the $163.8 million shortfall.
The plan ended on Aug. 7, 2009. The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan.
Within the next several weeks, the PBGC will send notification letters to all participants in the 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 Jan. 23, 2009, which set the maximum guaranteed amount of $54,000 a year for a 65-year-old. The agency became trustee of the plan on Dec. 28, 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.
Hartmarx produced and marketed business, casual, and golf apparel under its own brands, which included Hart Schaffner Marx, Hickey-Freeman, Palm Beach and Coppley among others. A drop off in demand for tailored clothing led to poor sales. The company and 51 affiliates sought Chapter 11 protection in the U.S. Bankruptcy Court in Chicago.
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.
Hartmarx 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.
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. 10-17