PBGC Takes Responsibility for the Grede Foundries Inc. Pension Plan
FOR IMMEDIATE RELEASE
June 22, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering more than 4,800 former workers and retirees of Grede Foundries Inc., a metal components supplier based in Novi, Mich.
The PBGC took action because the company sold substantially all of its assets in bankruptcy proceedings and the buyer did not assume the plan. Retirees will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire.
According to PBGC estimates, the Grede Foundries Inc. Employees' Retirement Plan is 45 percent funded with $60.9 million in assets to cover $135.4 million in benefit liabilities. The PBGC expects to be responsible for $69.7 million of the $74.4 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on Nov. 30, 2009. The agency assumed responsibility for the plan on June 14, 2010.
Within the next several weeks, the PBGC will send notification letters to all participants in the Grede Foundries plan. Under provisions of the Pension Protection Act of 2006, the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore, participants in the plan are subject to the limits in effect on June 30, 2009, which set a maximum guaranteed amount of $54,000 a year for a 65-year-old.
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.
Grede Foundries supplied metal components to the transportation and industrial sectors. The company was vulnerable to production slowdowns in the automotive sector, and the rising cost of health care and retiree benefits. Grede and its domestic units filed for Chapter 11 protection in the U.S. Bankruptcy Court in Madison, Wis. The court approved the sale of most of Grede's assets on Nov. 30, 2009, to its primary lender Wayzata investment Partners LLC.
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.
Grede 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 increase the PBGC's claims by $69.7 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. 10-40