PBGC Protects Penn Traffic Co. Pension Plans
FOR IMMEDIATE RELEASE
June 23, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for three underfunded pension plans covering over 3,700 former employees and retirees of bankrupt Penn Traffic Co., Syracuse, N.Y., a chain of supermarkets in western New York, northern Pennsylvania, Vermont and New Hampshire operating under the trade names BiLo, P&C and Quality.
The PBGC stepped in because the pension plans face abandonment after Penn Traffic completes bankruptcy liquidation proceedings and no entity remains to finance or administer the plans. Tops Markets LLC, Williamsville, N.Y., purchased substantially all Penn Traffic assets but declined to assume the pension plans. Retirees under the plans will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire.
Together, the Penn Traffic Big Bear Retirement Plan, the Pension Plan for Bargaining Employees of Eastern Pennsylvania, and the Riverside Division of Penn Traffic Co. Bargaining Employees Pension Plan are 57 percent funded, with $74.3 million in assets and $130.1 million in benefit liabilities, according to PBGC estimates. The agency expects to cover $53.8 million of the $55.8 million shortfall, and will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which terminated as of January 25, 2010. The PBGC became trustee of the plans on June 17, 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 2010 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, www.pbgc.gov 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 Penn Traffic 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 $53.8 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. 10-41