PBGC Protects Champion Parts Inc. Pension Plans
FOR IMMEDIATE RELEASE
January 12, 2010
WASHINGTON - The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for four underfunded pension plans covering nearly 1,800 former workers and retirees of Champion Parts Inc., a maker of automotive fuel and cooling system components based in Hope, Ark.
The PBGC stepped in because the pension plans failed to meet minimum funding requirements and would be abandoned after the company liquidates all of its assets in bankruptcy, leaving no entity to finance and administer the plans. Retirees under the plans will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
Together, the Champion Parts Inc. Northeast Rebuilder Employees Retirement Plan; Hope, Ark. Pension Plan; Ft. Worth, Tex. Pension Plan; and Fresno, Calif. Pension Plan are 66 percent funded, with assets of $9.3 million to cover $14.0 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for $4.6 million of the $4.7 million total shortfall.
The PBGC will use the plans' assets plus insurance funds to pay guaranteed benefits earned under the plans, which ended on January 25, 2008, when Champion Parts began chapter 7 bankruptcy liquidation proceedings. The Northeast Rebuilder and Hope, Ark. plans were frozen as of April 15, 2002, and May 27, 2007, respectively. Within the next several weeks, the PBGC will send notification letters to all participants in the plans.
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 Champion Parts plans are subject to the limits in effect on October 10, 2007, when the company filed for bankruptcy protection. The maximum guaranteed amount is $49,500 a year for a 65 year-old. The 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.
Champion Parts 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 plans' unfunded liabilities will have no significant effect on the PBGC's financial statements because 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. 10-18