PBGC Negotiates $7 Million in Accelerated Pension Funding for Workers at MTD Products Inc.
FOR IMMEDIATE RELEASE
September 23, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced an agreement with MTD Products Inc. that will improve the financial standing of a pension plan that covers about 360 former workers of a shuttered plant in Brownsville, Tenn.
MTD Products of Cleveland, Ohio, makes outdoor power equipment such as garden tractors, lawn trimmers, and mowers. The agreement stems from the July 28, 2009 closure of the Brownsville plant, where 358 active participants in the Retirement Plan for Hourly Union Employees of MTD Products Inc. lost their jobs. Unlike situations where the PBGC assumes responsibility for failed pension plans, MTD's plan, with more than 1,870 participants, has not failed, has complied with all funding requirements, and remains ongoing under the company's sponsorship.
"As businesses continue to change their staffing and manufacturing needs, we pay close attention to actions that may compromise pension plans," said PBGC Director Joshua Gotbaum. "We try to find ways that both meet business needs and protect workers' retirements."
Under the agreement, MTD made an accelerated $4.2 million contribution to the plan on Sept. 14. The payment will not be used to create a funding surplus in the plan that would reduce or preclude the company's regular plan contributions. Additionally, MTD will waive a credit balance resulting from a $2.8 million plan contribution in excess of the minimum required contribution made on Sept. 11, 2009.
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 $600 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. 10-52