PBGC Protects Worker Pensions at Fraser Papers
FOR IMMEDIATE RELEASE
August 31, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pension plan covering over 2,300 former employees and retirees of bankrupt Fraser Papers Limited, Madawaska, Me., a wholly-owned U.S. subsidiary of Toronto-based Fraser Papers Inc. (FPI), also in bankruptcy. The U.S. unit operated pulp and paper mills in Maine and New Hampshire.
The PBGC stepped in because the underfunded pension plan would have been abandoned after FPI, in liquidation, sold substantially all operating assets to a group of creditors. The transaction did not include the pension plan. Retirees under the plan will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire. The plan was frozen for salaried employees as of Oct. 31, 2009, and for bargaining unit employees as of Apr. 28, 2010.
The Pension Plan for the Eligible Employees of Fraser Papers Limited is 44 percent funded, with about $83 million in assets and $187 million in benefit liabilities, according to PBGC estimates. The agency expects to cover about $99 million of the $104 million shortfall, and will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which terminated as of Apr. 28, 2010. The PBGC became trustee of the plan on Aug. 31, 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 Fraser Papers Limited 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 $98.6 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. 10-48