PBGC Assumes James Square Nursing Home Pension Plan
FOR IMMEDIATE RELEASE
February 18, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering 750 workers and retirees of James Square Nursing Home, Inc., a provider of nursing and rehabilitative care in Syracuse, N.Y.
The PBGC took over the plan because the nursing home would be unable to pay its debts when due and continue in business unless the plan was terminated.
Spurred by deteriorating financial conditions, James Square filed for a distress termination on June 30, 2008. Under federal pension law, sponsors of underfunded plans may apply for such relief. To qualify, the employer must prove to the PBGC that it cannot remain in business unless the plan is terminated.
According to PBGC estimates, the James Square Nursing Home, Inc. Retirement Income Plan for Non-Union Employees is 66 percent funded, with $3.9 million in assets to cover $5.9 million in benefit liabilities. The PBGC expects to be responsible for the entire $2 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on Aug. 31, 2008. James Square's plan was frozen on March 9, 2008.
Within the next several weeks, the PBGC will send notification letters to all participants in James Square's pension plan. Participants in the plan are subject to the limits in effect on Aug. 31, 2008, which set a maximum guaranteed amount of $51,750 a year for a 65-year-old. The agency became trustee of the plan on Jan. 21, 2010.
Employees of James Square Nursing Home 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.
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. 10-24