PBGC Takes Responsibility for Chardon Rubber Co. Pension Plan
FOR IMMEDIATE RELEASE
October 20, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering more than 840 former workers and retirees of Chardon Rubber Co., a designer and manufacturer of rubber and plastic components based in Chardon, Ohio.
The PBGC stepped in because Chardon Rubber has sold substantially all of its assets in 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 Chardon Rubber Company Retirement Plan is 57 percent funded, with assets of $16.8 million to cover $29.5 million in benefit liabilities. The PBGC expects to be responsible for $12.4 million of the $12.7 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan. The plan ended on Dec. 31, 2009, and the agency assumed responsibility for the plan on Sept. 23, 2010.
Within the next several weeks, the PBGC will send notification letters to all participants in the Chardon Rubber 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 when Chardon Rubber filed for bankruptcy protection on May 15, 2009, which set a maximum guaranteed amount of $54,000 per 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 five years immediately before the May 15, 2009 bankruptcy date may not be fully guaranteed.
Chardon Rubber was founded in 1978 and offered mixing, molding, rubber extruding, forming and engineering services to the transportation, appliance, custom mixing and construction sectors. The company experienced declining sales in 2007 and was unable to complete restructuring efforts due to the downturn in the real estate and credit markets in 2008. After entering into a sale agreement with Westinghouse Air Brake Technologies Corp., Chardon Rubber filed for Chapter 11 protection in the U.S. Bankruptcy Court in Cleveland, Ohio.
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.
Chardon Rubber 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 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. 11-05