PBGC Tells Bendix to Pay $16.9 Million in Pension Debt
FOR IMMEDIATE RELEASE
February 04, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has notified Bendix Commercial Vehicle Systems LLC of its responsibility to pay $16.9 million in pension liability. The obligation arises from the shutdown of Bendix's Frankfort, Ky., plant and the resulting job loss of some 60 workers who were participants in the underfunded Bendix Commercial Vehicle Systems LLC Pension Plan for Hourly Employees.
Bendix, which supplies brakes and vehicle control systems for trucks and commercial vehicles, closed the Frankfort plant on Dec. 31, 2007. The company's employees became jobless when Bendix moved its braking system compressor operation to AcuÃ±a, Mexico. Bendix notified the agency about the plant closure on Jan. 30, 2008.
Under the Employee Retirement Income Security Act of 1974 (ERISA), an employer is required to provide protection for an underfunded pension plan when more than 20 percent of its employees covered by the plan lose their jobs due to a cessation of operations at a facility. Bendix's shutdown of its Frankfort plant led to PBGC's assessment of $16.9 million in liability.
For more than two years, the PBGC has made numerous efforts to engage Bendix on the matter. To date, the company has made no serious attempt to work with the PBGC, and therefore the agency must take the step of officially informing Bendix of its pension liability.
Typically, companies engage the PBGC in negotiations to resolve the liability after notifying the agency of a cessation of operations. Recent agreements with pension plan sponsors have resulted in protections for underfunded pension plans that include bonds, letters of credit, and cash contributions that improve participants' retirement security. Since 2007, the agency has negotiated more than $400 million in additional protection for defined benefit plans covering over 50,000 workers and retirees.
To satisfy its pension obligation in connection with the facility closing, Bendix will need to provide financial assurance to the agency that the full $16.9 million liability will be contributed to the affected plan if it ends by Dec. 31, 2012 - five years after the plant shutdown.
Bendix is headquartered in Elyria, Ohio, and is owned by Knorr-Bremse AG of Munich, Germany.
The PBGC is a federal corporation created under ERISA. 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. 10-23