PBGC Moves to Protect Pensions at New United Motor Manufacturing
FOR IMMEDIATE RELEASE
March 03, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it will take responsibility for the underfunded pension plan covering more than 5,800 employees and retirees of New United Motor Manufacturing Inc. (NUMMI), the vehicle assembler owned jointly by Toyota Motor Corp. and Motors Liquidation Corp., the liquidating entity that remained after General Motors (GM) emerged from bankruptcy.
The pension insurer's move comes as NUMMI prepares to end production at its Fremont, Calif., assembly plant on March 31, 2010. The PBGC has determined the plan will be abandoned as a result and unable to pay benefits when due.
The New United Motor Manufacturing Inc. / UAW Hourly Defined Benefit Pension Plan is 55 percent funded, with assets of $161 million to cover benefit liabilities of $292 million, according to PBGC estimates. The agency expects to cover $126 million of the $131 million shortfall.
Until the PBGC becomes trustee of the pension plan, the plan will remain ongoing under company sponsorship. The agency will send notification letters to all plan participants when it becomes trustee.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ends effective March 3, 2010. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2010 is $54,000 a 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. A preliminary PBGC analysis of the NUMMI pension plan indicates few current retirees will see reductions to their monthly benefit.
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.
NUMMI 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 the claim was previously included in the agency's fiscal year 2009 financial statements, in accordance with generally accepted accounting principles.
NUMMI was formed in 1983 by Toyota and General Motors, each with a 50 percent equity interest in the enterprise. When GM emerged from bankruptcy reorganization last year, it left its interest in NUMMI with the old GM bankrupt estate, a liquidating corporate shell known as Motors Liquidation Corp. Toyota is the remaining active shareholder in NUMMI.
The PBGC is a federal corporation created under the 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. 10-25