PBGC Negotiates $111 Million of Additional Pension Protection for Indiana Workers at BorgWarner
FOR IMMEDIATE RELEASE
March 24, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced an agreement with BorgWarner, Inc., to strengthen the pension plan of almost 3,000 former workers at BorgWarner's shuttered facility in Muncie, Ind.
BorgWarner is a manufacturer of automatic transmission parts based in Auburn Hills, Mich. The agreement stems from the April 2009 shutdown of the company's Muncie plant. Unlike situations where the PBGC assumes responsibility for failed pension plans, the Muncie pension plan (Retirement Income Program of BorgWarner Diversified Transmission Products, Inc., Muncie Plant), has not failed and remains ongoing under the company's sponsorship.
"When factories close, the PBGC engages with employers to make sure the pension plan obtains the additional protection required by law," said PBGC Acting Director Vince Snowbarger. "We are proud that since 2007 the PBGC has negotiated more than half a billion dollars in pension protection for American workers. We appreciate BorgWarner's willingness to work with us on this agreement to strengthen its workers' retirement security."
Under the agreement, BorgWarner made a $23 million cash contribution into the pension plan in December 2009, and will make additional cash contributions of $15 million per year in 2011, 2012, and 2013 in excess of any minimum required contributions. The company will also provide $35 million in the form of a letter of credit or other security, and will waive a credit balance valued at $8 million in 2014.
The Employee Retirement Income Security Act of 1974 (ERISA), the federal pension law that created the PBGC, requires the agency to seek additional protection when more than 20 percent of a company's employees covered by a pension plan lose their jobs due to a cessation of operations at a facility. However, the agency strives to create settlements that safeguard pension plans, while recognizing the business needs of the companies that sponsor them. Since 2007, under this program, the PBGC has obtained more than $500 million in additional protection for defined benefit plans covering over 60,000 workers and retirees.
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. 10-26