PBGC Negotiates $7.2 Million in Additional Pension Funding for Reynolds Packaging Group
FOR IMMEDIATE RELEASE
June 10, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced an agreement with Reynolds Packaging Group that strengthens a defined benefit plan covering more than 300 former workers at the company's shuttered plant in Downingtown, Pa.
Reynolds Packaging Group of Richmond, Va., is widely known for consumer goods such as Reynolds Wrap, Reynolds Oven Bags and Presto private-label storage containers. The company also makes industrial flexible packaging applications. The plant in Downingtown housed the company's medical thermoformed packaging operations.
The agreement with the PBGC stems from the March 27, 2009 shutdown of the Downingtown plant where 114 workers lost their jobs. Unlike situations where the PBGC assumes responsibility for failed pension plans, the Reynolds Packaging Group Pension Plan for Hourly Employees of Downingtown Plant, has not failed and remains ongoing under the company's sponsorship.
"When plan sponsors close facilities, the agency will actively engage employers to ensure that pension plans receive the additional financial protection required by law," said PBGC Acting Director Vince Snowbarger. "We are pleased that Reynolds Packaging Group stepped up and worked with us on this agreement, which enhances the financial health of the plan."
Under the agreement, Reynolds Packaging will pay more than $5.3 million into the plan over the next four years: about $2.3 million in contributions above the required minimum will be made this year, and just over $1 million will go into the plan in each of the following three years. The company also agreed that it will not use the additional contributions as well as certain contributions made prior to the agreement to offset future funding requirements. Reynolds Packaging made more than $1.8 million in excess contributions to the plan before it closed the Downingtown plant.
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. 10-38