PBGC Takes Responsibility for the Irwin Financial Pension Plan
FOR IMMEDIATE RELEASE
August 20, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering more than 1,000 former workers and retirees of Irwin Financial Corp., a bank holding company based in Columbus, Ind.
The PBGC stepped in because Irwin Financial is liquidating under bankruptcy proceedings and there will be no sponsor left to fund or administer 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 Irwin Financial Corporation Employees Pension Plan is 56 percent funded, with assets of $26.7 million to cover $47.2 million in benefit liabilities. The PBGC expects to be responsible for $19.1 million of the $20.5 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on Sept. 18, 2009. The agency assumed responsibility for the plan on Aug. 4, 2010.
Within the next several weeks, the PBGC will send notification letters to all participants in the Irwin Financial 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 Sept. 18, 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.
Irwin Financial operated two banks, Irwin Union Bank and Trust Co., and Irwin Union Bank, F.S.B. On Sept. 18, 2009, Irwin Union was shut down by the Indiana Department of Financial Institutions, the other bank was closed by the U.S. Treasury Department's Office of Thrift Supervision. Additionally, the Federal Deposit Insurance Corp. was appointed as receiver of both banks. Irwin Financial's decline was driven by steep losses on home equity loans. The FDIC entered into a purchase agreement with First Financial Bank, N.A., of Hamilton, Ohio, to buy the banks. The pension plan was not included in the agreement. The company filed for Chapter 7 liquidation on Sept. 18, 2009 in the U.S. Bankruptcy Court in Indianapolis, Ind.
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.
Irwin Financial 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 $19.1 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.
— ### —
PBGC No. 10-47