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PBGC Assumes Colonial Bank Pension Plan

April 30, 2010

WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering about 3,250 former employees and retirees of Colonial Bank, the principal subsidiary of Colonial BancGroup Inc., Montgomery, Ala.

The Alabama State Banking Department closed the insolvent Colonial Bank on August 14, 2009, and placed it into Federal Deposit Insurance Corp. (FDIC) receivership. The FDIC sold substantially all Colonial Bank assets to Branch Banking & Trust Co. (BB&T) of Winston-Salem, N.C. BB&T did not assume the pension plan. The PBGC stepped in because the plan would be abandoned by bankrupt Colonial BancGroup, now a liquidating corporate shell.

Retirees will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire.

The Colonial Retirement Plan is 75 percent funded, with about $57 million in assets and $76 million in benefit liabilities, according to PBGC estimates. The agency expects to cover around $18 million of the nearly $19 million shortfall, and will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on August 14, 2009. The PBGC became trustee of the plan on April 27, 2010.

Within the next several weeks, the PBGC will send trusteeship notification letters to all plan participants. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2009 is $54,000 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits.

Workers and retirees with questions may consult the PBGC Web site, or call toll-free at 1-800-400-7242. TTY/TDD users should call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242.

Retirees of Colonial BancGroup 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

Assumption of the plan's unfunded liabilities will increase the PBGC's claims by $18.0 million and was not previously included in the agency's fiscal year 2009 financial statements.

The 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. 10-29